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ANNUAL REPORT 2008

L.P.N. Development Public Company Limited

Vision

“To perform a leading position of residential condominium developer through creating integrated value to promote the optimized quality of community resident’s life while sustaining shareholder and other stakeholder’s benefit under Good Corporate Governance standard”

Mission

To Shareholder:

ANNUAL REPORT 2008

Retain market leadership in focus target group and establish confidence with liquidity management for continuity of growth and optimized profit margin in accordance with Good Corporate Governance To Customer/Resident: Maintain value of integrated solutions of products, services and community management effectiveness to promote real pleasure of living of residents to create confidence and faith in the “Lumpini” Brand To Staff: Enhance Staffs happiness, career growth, security by developing competency via learning management, under LPN Core Value and organization change to be a Quality Organization To Stakeholders: Enlarge cooperation with business alliances to achieve corporate goals during the economic crisis To Society: Preserve the environment and be socially responsible in all areas of the organization to the develop a quality community

L.P.N. D e v e l o p m e n t P u b l i c C o m p a n y L i m i t e d

L.P.N. Development Public Company Limited 1168/109 36th Floor Lumpini Tower, Rama 4 Road, Thungmahamek, Sathorn, Bangkok 10120 Tel. 02-285-5011-6 Fax. 02-258-5017 Call Center 02-800-9009 www.lpn.co.th

Core Value Collaboration Lateral Thinking Alliances Speed

C - L - A - S - S - I - C Service Minded Integrity Cost Awareness

Content

Years o n t h e s t a b l e g r o w t h w a y

The Company's Background: 20 years on the stable growth way Summary of Financial Statement Message from the Chairman Management of the Environment and Society Management of Product Brand or Brand "Lumpini" Development of LPN's Condominium

1 7 8 10 18 20

Summary of the Real Estate Business in 2008 and Trends for 2009 Risk Factors Summary of the Performance in 2008 and Trends in 2009 Corporate Information

27 31 33 39

Audit Committee Report 2008 Management Structure LPN Code of Conduct Operating the Business According to Principals of "Sufficiency Economy" of L.P.N. Development PCL Internal Control Connected-Transactions with Subsidiary Companies

53 55 69

Explanation and Analysis of the Management Report on the Responsibility of the Board of Directors of the Company for the Financial Report Auditor's Report and Balance Sheets

83

72 73 75

86 87


ANNUAL REPORT 2008

L.P.N. Development Public Company Limited

Vision

“To perform a leading position of residential condominium developer through creating integrated value to promote the optimized quality of community resident’s life while sustaining shareholder and other stakeholder’s benefit under Good Corporate Governance standard”

Mission

To Shareholder:

ANNUAL REPORT 2008

Retain market leadership in focus target group and establish confidence with liquidity management for continuity of growth and optimized profit margin in accordance with Good Corporate Governance To Customer/Resident: Maintain value of integrated solutions of products, services and community management effectiveness to promote real pleasure of living of residents to create confidence and faith in the “Lumpini” Brand To Staff: Enhance Staffs happiness, career growth, security by developing competency via learning management, under LPN Core Value and organization change to be a Quality Organization To Stakeholders: Enlarge cooperation with business alliances to achieve corporate goals during the economic crisis To Society: Preserve the environment and be socially responsible in all areas of the organization to the develop a quality community

L.P.N. D e v e l o p m e n t P u b l i c C o m p a n y L i m i t e d

L.P.N. Development Public Company Limited 1168/109 36th Floor Lumpini Tower, Rama 4 Road, Thungmahamek, Sathorn, Bangkok 10120 Tel. 02-285-5011-6 Fax. 02-258-5017 Call Center 02-800-9009 www.lpn.co.th

Core Value Collaboration Lateral Thinking Alliances Speed

C - L - A - S - S - I - C Service Minded Integrity Cost Awareness

Content

Years o n t h e s t a b l e g r o w t h w a y

The Company's Background: 20 years on the stable growth way Summary of Financial Statement Message from the Chairman Management of the Environment and Society Management of Product Brand or Brand "Lumpini" Development of LPN's Condominium

1 7 8 10 18 20

Summary of the Real Estate Business in 2008 and Trends for 2009 Risk Factors Summary of the Performance in 2008 and Trends in 2009 Corporate Information

27 31 33 39

Audit Committee Report 2008 Management Structure LPN Code of Conduct Operating the Business According to Principals of "Sufficiency Economy" of L.P.N. Development PCL Internal Control Connected-Transactions with Subsidiary Companies

53 55 69

Explanation and Analysis of the Management Report on the Responsibility of the Board of Directors of the Company for the Financial Report Auditor's Report and Balance Sheets

83

72 73 75

86 87


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L.P.N. Development Public Company Limited (LPN) The Company’s Background is a condominium developer with a long history of nearly 2 decades. Throughout that past period, the Company importantly developed in term of both thinking method and internal management procedures deriving in the different visions for each period of time. Moreover as time goes by, profound of the project development concept is deeply made according to the experience and intention in developing the quality residences of the Company for the residents.

Pioneering Rama 4 Road as a new business centre through Blue Ocean Strategy.

Year

1989

Commencement of Business The Company was established by individuals from various occupations, jointly proposing to develop the quality real-estate for the Thai society on 21st June 1989 with Baht 50 million registered capital. The development commenced from Lumpini Tower Project, being the f irst 37-storey off ice building on Rama 4 Road and the head off ice of the Company at present.

Number of membership is increased to more than 1 time comprising of families.

2,000

Establishing Lumpini Property Management to manage a quality of residential life.

Year

1990-1993

Year

Business Restructuring

1994

Conversion into public limited company

Apart from developing various projects, the commencement of business operation was also for an extension of investment and of a service provision development under the operation of the Company and its aff iliates. In year 1990, the Company invested in Pornsanti Co., Ltd. in proportion of 20.00% for developing the projects both in form of condominium and others as well as incorporated Lumpini Property Management Co., Ltd. in year 1992 for after sale service operation focusing on the management of the various projects of condominiums developed by the Company and its aff iliate-companies. Besides, the Company increased its shareholding ratio to 99.99% of paid up capital of Baht 200 million in Pornsanti Co., Ltd.

Within 5-year-period of the Company’s business operation, the Company effected the registration of conversion into public limited company on 21st June 1994 with registration No. BorMorJor.477 and was listed in the Stock Exchange of Thailand with the Securities namely “LPN” and issued ordinary shares to increase the capital and distribute among public in number of 9.2 Million shares having Baht 10 par value with offering value per share of Baht 64. Subsequently, the Company increased the capital to be Baht 460 million on 4th November 1994.

Annual Report 2008 L.P.N. Development Public Company Limited 1


Conf ident in target group and business strategy.

400,000

More than square metres are under management. Turning a crisis into opportunity. Continuing to conduct a marketing campaign and stimulating the market under the crisis.

Years

1997-1998

Economic Crisis

Thailand’s economic crisis resulting from the f loating of Thai Baht currency and the closure of 56 f inancial institutions caused spread effect to the economic system. The Company was severely effected by such crisis causing the Company to have the debt burden with the f inancial institutions in an amount more than Baht 3,000 million. It was, therefore, necessary for the Company to reorganize and change all of its operational strategies and procedures as well as enhance capacity of the employees compatible to economical recession.

Years

1999

Years

2000

Successful in debt restructuring Increase the clearness of and being ready to operate being good governance business organization On 26th July 1999, the Company had On 1st February 2000, the Company’s appointed Cathay Asset Management Board of Directors considered and Co.,Ltd. as the consultant in respect appointed the Audit Committee and of restructuring and increase of also determined the scope, power, the Company’s capital by jointly duties, and responsibility pursuant formulating the negotiation trend on to the criteria on business superrestructuring with each creditor, and vision of the stock Exchange of also planning for the Company’s Thailand by which the Company’s increase of capital. The Company Board of Directors gave the priority enjoyed success in restructuring to the business operation as per with f inancial institutes for the total such good corporate governance obligation of value Baht 3,305.93 Mil ion. principle. (Resulting from the conf idence given to the Company by the financial institutions and consequently causing the provision of support to the Company until present) Besides, the Board of Directors of L.P.N. Development Public Company Limited had held the Extraordinary General Meeting of Shareholders No. 1/1999 on 4th October 1999 for consideration on the increase of the Company’s capital from Baht 460,000,000 (Four Hundred Sixty Million Baht Only) to Baht 3,983,000,000 (Three Thousand Nine Hundred Eighty Three Million Baht Only) by the allotment of 352,300,000 (Three Hundred Fifty Two Million and Three Hundred Thousand) new ordinary shares, each of par value Baht 10, making up the total amount of Baht 3,523,000,000 (Three Thousand Five Hundred Twenty Three Million Baht Only)

2 Annual Report 2008 L.P.N. Development Public Company Limited

Years

2001

The Legend Maker Company of the residential condominium located in the centre of Bangkok Among the recession of the economic condition by which other developers postponed the development of condominium project, the Company turned the crisis into opportunity by always educating the residential basic demand of the customers and as a result from the change of thinking method and operational procedure, leading to the new style of project development strategy which was the residential condominium located in the center of Bangkok near BTS line with the price of less over Baht 1 million. The Company launched Lumpini Place Sathorn Project – the residential condominium located on Narathiwatratchanakarin Road worth of Baht 750 Million which was deemed to be the starting point of “City Condo” being the model of project development of other companies and entrepreneurs subsequently. The Company also launched Lumpini Center Happyland Phase 3, the residential condominium in Bangkapi area. As the project development policy rules the occupancy of the customers within a 1-year period, as a result the construction works were completed and all of the revenue was recognized in 2002. There were continuous promotion activities held. In November 2001, the Company agreed to enter into a joint venture agreement with Uni-Venture Public Company Limited, Sansiri Public Company Limited and Yaowawong Co., Ltd. setting up Grand Unity Co., Ltd. for the purpose of development of the WaterCliff Project the residential condominium in Rama 3 area, that had been postponed since 1997, due to the economic crisis. The said joint venture company developed the project under the new name “Lumpini Place WaterCliff” having L.P.N. Development Public Company Limited responsible for marketing administration, sales and construction work of the whole project. Such project was one of the most successful projects, being the problem solving of the entrepreneurs, customers, f inancial institutions and stakeholders and the reduction the pending construction building causing the environmental impact in such area.


Skipping growth Registered capital is three times increased.

1994

Years

2002

2002

Increase of the registered capital for stability of f inancial condition Subject to the resolution of Annual General Meeting of Shareholders for year 2002 on 30th April 2002, the meeting resolved to decrease the registered capital from Baht 3,983,000,000.00 (Three Thousand Nine Hundred Eighty Three Million Baht Only) to Baht 460,000,000.00 (Four Hundred Sixty Million Baht Only) and later increased the capital to 75,000,000.00 shares (Seventy Five Million shares of value Baht 750,000,000.00 (Seven Hundred Fifty Million Baht Only) when added up to the existing registered capital of Baht 460,000,000.00 (Four Hundred Sixty Million Baht Only), then the Company had total registered capital of 2002 in amount of Baht 1,210,000,000.00 (One Thousand Two Hundred Ten Million Baht Only). The paid-up capital as at 29th January 2004 was in an amount of Baht 946,826,190 (Nine Hundred Forty Six Million Eight Hundred Twenty Six Thousand One Hundred Ninety). Besides, the Company’s Board of Directors proposed the Shareholders’ Meeting to appoint Mr. Pakorn Thavisin as the Vice Chairman of the Company’s Board of Directors.

Years

2003-2004

Change of strategy to turn professional On the occasion that the Company had been carried on for 15th year in 2004, the Company had held various events under the “15 years of bounded relationship” to express the gratitude to the honoured customers and supporters who have provided the Company with the loyal support all along such as provision of inspection service of working system installed in the customer’s condominium unit without any service fee charged, giving necessary equipments to various condominium juristic persons for the public benefit and also subsidised the charitable events such as subsidisation of fund in construction of tennis court for youth or contribution to Thai Red Cross Society to buy the dialysis equipment in assistance of terminal chronic nephritic patient, joint holding a charity concert with the Stock Exchange of Thailand in order to contribute the income to charity organizations, holding event under the “15 years of bounded relationship, jointly contribution to the Phayathai Babies Home” and giving scholarship to the sons and daughters of the Company’s staffs and etc.

Shares) at par value Baht 1 making a total registered capital of Baht 1,486,706,550 (One Billion Four Hundred Eighty Six Million Seven Hundred Six Thousand Five Hundred Fifty Baht Only) divided into 1,486,706,550 ordinary shares (One Billion Four Hundred Eighty Six Million Seven Hundred Six Thousand Five Hundred Fifty Shares) valued Baht 1 (One Baht Only). Increase the proportion of investment in Grand Unity Development Co., Ltd. from 25% to 33.33% in order to enlarge the opportunity in development of project, marketing, and products including to increase the business alliance. The Company entered into the Agreement to lease out the whole area of Lumpini Residence building developed to be an apartment for rental with Riei (Thailand) Co. Ltd. for the expansion purpose of the business in f ield of serviced apartment and rental for long stay for the Japanese customers.

The Company was invited by the Stock Exchange of Thailand to participate “Thailand Focus 2004” Investment Restructuring and change of events to present the operational results, policies, organization’s strategy The Annual General Shareholders’ Meeting of 2004 directions, strategies and operational plans of held on 7th April 2004 resolved to change the par the Company to foreign high calibre executives, value from Baht 10 to Baht 1, increasing the number managers of funds and investors from leading of shares from 121,000,000 shares to 1,210,000,000 institutes. shares. In the said meeting it also resolved to register the increase of the Company’s Capital to be 276,706,550 shares (Two Hundred Seventy Six Million Seven Hundred Six Thousand Five Hundred Fifty Annual Report 2008 L.P.N. Development Public Company Limited 3


Number of membership is increased to more than families and building area under management is more than million Square metres.

15,000

1.2

Years

2005-2006

Leader in the real estate business and management restructuring It was not only the period of stable growth of the Company, but also the step being widely esteemed as the leader of condominium developer by the analysts, customers and mass media. The Company was also awarded and ranked from various authorities and organizations as follows: • The Company had its securities ranked in SET Index 100 of Stock Exchange of Thailand which was published on 18th April 2005. • The Company was also ranked in 2005 to be 1 of 93 listed companies in the Stock Exchange of Thailand and was awarded an appraisal of operational results for outstanding good governance in the Top Quartile group selected by the Thai Institution of Directors Association (IOD). This time was the 3rd year straight that the Company was honoured to be ranked in the Top Quartile group. • The Company was ranked by the Association of Promotion of Institutions of Company Directors of Thailand as a Company with level 4 performance that had performed according to standards of good governance focusing on disclosure of information to investors, shareholders and the general public in a transparent manner on a regular basis, with an average of 80-89 points from a total of 100 points. This year is the fourth year that the Company has been selected for good performance with good governance, guaranteeing the Company as a registered company under the Stock Exchange of Thailand. • The Company received a certif icate from the Stock Exchange of Thailand on the occasion that the Company was 1 of 3 companies that was selected to win the SET Awards 2006 for Best Performance in Property & Construction which came from the desire for sustainable growth and continuous value for shareholders. The award is given based on f inancial status and performance excellence as well as policies concerning disclosure of information specified by the Stock Exchange of Thailand and stock liquidity.

4 Annual Report 2008 L.P.N. Development Public Company Limited

There were major changes with respect to the Company’s Board of Directors during years 2005-2006 as follows: • Professor Mora Bunyaphala, Chairman of the Board of Directors, passed away on 30th July 2005. The Board’s Meeting No. 4/2005 appointed Mr. Pakorn Thavisin to assume the post of Chairman of the Company’s Board with effect on 11th August 2005. • Mr. Amornsuk Noparumpa was appointed to be director and a member of the Audit Committee with effect on 22nd December 2005. The incumbent Audit Committee were re-appointed to resume their off ices during 1st February 2006 to 30th April 2008. • The Company appointed Mr. Tikhamporn Plengsrisuk as President and Chief Executive Off icer in place of Mr. Tawechai Chitasaranachai who resigned effective as of 1st January 2006. • The Company appointed Professor Siri Keiwalinsrit and Mr. Tawechai Chitasaranachai as Vice Chairman effective as of 26th April 2006. • The Company appointed Mr. Amornsuk Noparumpa and Mr. Weerasak Wahawisal as Audit Committee in place of Professor Siri Keiwalinsrit and Mr. Vudhiphol Suriyabhivadh who resigned, effective as of 26th April 2006 for a term of off ice until 30th April 2008. The Audit Committee is comprised of: 1. Mr. Amornsuk Noparumpa Chairman of Audit Committee 2. Mr. Thep Roongtanapirom Audit Committee 3. Mr. Weerasak Wahawisal Audit Committee • The Company appointed Mr. Opas Sriyapak in the position of Executive Director and Managing Director effective as of 26th April 2006. Besides, another major change of the Company is that the Annual General Meeting of Shareholders in 2006 held on 26th April 2006 passed a resolution to reduce capital from Baht 1,486,706,550 to Baht 1,475,698,768 by striking ordinary shares remaining from the reserve held for exercising rights to swap debentures with 11,007,782 shares at Baht 1 per share and approved amendment of Article 4 of the Memorandum of Association of the Company to ref lect th capital decrease.


54

Almost 2 million square metres of projects and families are under “Lumpini Society”

30,000

Years

2007-2008

From “Vibrant Community” to the third step of vision for quality development In year 2007, the Company changed the investment policy in Grand Unity Development Company Limited, by decreasing the shareholding ratio from 33.33% to 20% of the paid-up capital and established Lumpini Project Management Services Company Limited for operating the entire immoveable asset project management such as engineering and construction work, f inancing, marketing and sale. It was one of the important developments of the Company in year 2007, pushing on the society and environmental management policy under “Vibrant Community” project to be the principle policy for the Company’s business operation in order to create the good environment, society and quality of life for the community developed and managed by the Company as well as the nearby community and the society in the greater level. The Company emphasized on the participation of the customers, alliances and staffs such as holding work-shop seminar for learning and participation and exchanging the opinions and experiences from the representatives of the Board of co-owners of all projects under topic of “Vibrant Community” in order to jointly determine the standard and style of living together in each community developed by the Company. That caused consequential effect to year 2008, being the beginning year of the third step of vision, which emphasized on the quality development in all aspect both staffs, internal management procedure, customers as well as f inancing in order to create the actual happiness based on the suff iciency principle. Besides, the major changes in other respects can be summarised as follows: • The Company’s Board of Directors meeting number 5/2007, held on 8th November 2007, resolved to appoint Nomination and Remuneration Committee for considering the remuneration and benef it of the directors, managements and staffs. • The Company was invited by the Stock Exchange of Thailand to participate in “Thailand Focus 2007” held between 12th-14th September 2007 at the Plaza Athenee Hotel located on Wireless Road in Bangkok to present the performance results, policies, direction, strategies and the Company’s business operation plans in the form of a One-on-One Meeting with top level executives of funds, fund managers, stock analysts and leading institutional investors from overseas.

Year 2008 was a year that the Company still emphasized on the quality development as per the third step of vision by paying attention in each procedure commencing from the beginning of the project, sale, transfer of ownership, delivery of products to customers and community management, being the monitoring of the quality of life of the resident under the strategy of “Vibrant Community”. The Company also continuously responded the demand of residence by opening 5 new residential condominium projects, with the following details: Projects 1. Lumpini Ville Ramkhamhaeng 26 2. Lumpini Suite Rama 8 3. Lumpini Place Rama 8 4. Lumpini Place Rama 9-Ratchada 5. Lumpini Ville Bangkae Total

Project Value

No. of

Project Period

1,250 503 1,974 2,890 290 6,907

998 178 1,121 1,154 268 3,719

Apr 08 - Jun 09 Apr 08 - Aug 09 Apr 08 - Aug 09 Jun 08 - Apr 10 Dec 08 - Jun 10

(Baht)

(units)

The Company also delivered Lumpini CondoTown Bodindecha-Ramkhamhaeng project, being a condominium for the moderate and low-income person with 3,500 units and completely constructed in March, delivered to the customers which was deemed to be the f irst project of the huge community under “Lumpini CondoTown” brand by which the Company invented a f inancial innovation by closely cooperating with the f inancial institutions for the aggregate interest of all parties, both the customers, f inancial institution and the Company. When the project was partially constructed, the Company was trusted by the banks and customers to enter into the loan and credit facility agreement, causing the customers to posses the condominium unit prematurely, the bank to obtain more customers and the Company to receive fund from ownership transfer and reduce the project cost with respect to the accrued interest. As due to the condition of the project size causing the period of ownership transfer, the Company agreed with the f inancial institutions and found a solution for the customers to utilize the condominium unit prior to ownership transfer by having the customers to execute the loan agreement with the f inancial institutions by which the f inancial institutions will reduce certain of loan facility amount of the Company. Such innovation caused advantages to 3 parties both the customers, the f inancial institutions and the Company, the customers were able to possess the condominium unit prematurely and the Company was able to reduce risk and interest expenses. Annual Report 2008 L.P.N. Development Public Company Limited 5


Adjust to economic crisis

• In the middle of year 2008, the Company was reorganized for changing the operational strategy for conformity with the changed situation, by which such reorganization will become effective in year 2009, as well as adjusted the new project development plan for decreasing the risk from the f luctuation of the construction material and eff icient cost management causing the Lumpini Ville Bangkae project opened at the late of the year and a pilot project in new location at Bangkae was incredibly well responded by the customers enabling the Company to close the sale within only 3 hours. • The Company was awarded by the Off ice of the Consumer Protection, Off ice of the Prime Minister as “Good Real Estate Entrepreneur for years 2007-2008” being the project arranged by the Off ice of the Consumer Protection for the entrepreneur to have the ethics and social responsibilities. • Forbes Asia Magazine (September 2008 edition) selected the Company as 1 of “200 Best Under a Billion” by which the survey of 24,155 listed companies in Asia Pacif ic having the income less than US$ 1,000 million and continuous and outstanding operational result was made. Only 7 Thai companies were awarded.

6 Annual Report 2008 L.P.N. Development Public Company Limited

• With the business operation made as per the good governance principle, emphasizing the transparently disclosure of the information to the investors, shareholders and general persons, the Company was ranked by the Thai Institution of Directors Association as the Company with the good corporate governance in 4 stars level which was the 5th year straight that the Company was honoured to be ranked. • As due to the subprime crisis arising in USA and the internal political situation at the late year 2008 causing effect to the internal f inancial market and f luctuation to the stock exchange, the Stock Exchange of Thailand and the Off ice of the Securities and Exchange Commission, therefore, promoted the listed companies in the Stock Exchange of Thailand to perform the Share Repurchase Program (Treasury Stock) in order to build up the conf idence to investors. The Company’s Board of Directors meeting number 6/2008 held on 9th October 2008, therefore, resolved to approve the Share Repurchase Program as due to the market price of the Company’s shares at that period was lower than the basic factor of the Company by determining the share repurchase limit amount in an amount of Baht 200 million divided into 62 million shares or 4.20% of the total issued shares of the Company or 1,475,698,768 shares and such repurchase will be transacted in the Stock Exchange of Thailand only during 24th October 2008 until 23rd April 2009.


Summary of Financial Statements Unit : Million Baht

Assets Total assets Land and cost of project under development Inventories Land and cost of project held for development Assets for rent-net

2008

2007

2006

2005

2004

8,846.49 3,781.48 1,403.97 681.92 709.99

7,175.76 4,532.36 501.64 660.72 678.53

5,969.80 3,485.15 276.16 837.75 617.67

4,523.70 2,408.16 124.73 819.59 314.14

4,414.81 2,313.76 85.33 661.14 317.60

2,063.69 530.67 4,362.02 1,474.59 4,484.48

1,202.01 501.00 3,348.80 1,475.70 3,826.96

1,033.89 230.00 2,657.43 1,475.70 3,312.37

234.97 340.00 1,532.26 1,475.70 2,991.44

1,598.45 2,090.87 1,205.60 2,323.94

7,018.71 7,303.69 4,826.17 2,192.54 1,205.44

6,574.22 6,823.77 4,294.89 2,279.33 927.74

4,747.84 5,020.49 3,213.88 1,533.96 765.23

3,346.45 3,582.63 2,159.64 1,186.81 588.38

2,308.84 2,478.40 1,498.75 810.10 448.39

3.04 0.82 16.50 29.01 15.05 **

2.59 0.63 13.60 25.99 14.11 0.32

2.24 0.52 15.24 24.28 14.58 0.26

2.20 0.43 16.42 22.14 13.17 0.22

2.12 0.41 0.36 18.09 22.86 12.27 0.20

Liabilities and Shareholders' Equity Short-term loans Long-term loans Total liabilities Issued and fully paid-up share capital Shareholders' equity Operational Result Revenues from sales Total revenues Cost of sales Gross profit from sales Net profit (Loss) Financial Ratio * Book value per share * Net profit per share Diluted earning per share Net profit margin Return on Equity Return on Assets Dividend per share * Weighted average shares ** Pending Approval from the Ordinary General Meeting of Shareholders in 2008 Note: 1) Information from Consolidated Financial Statements 2) To change par value from Baht 10.0 to Baht 1.0 in year of 2004

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 -3,000 -4,000 -5,000 -6,000

7,303.69 24 21 18 5,020.49 15 12 3,582.63 9 2,478.40 6.55 1,943.58 6 3 678.46 1,069.81 0.82 0.63 4.97 0.52 0.43 0.41 0 2.01 -3 -6 -9 -12 -15 -18 6,823.77

520.42 446.31 460.23 -1.19 -8.30 -13.53

Total assets (Million Baht)

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Net prof it per share (Baht)

Annual Report 2008 L.P.N. Development Public Company Limited 7


Message from the Chairman Dear Shareholders, The year 2008 has been a year in which risk factors have surrounded businesses. Such risks have been caused both by internal and external factors. External factors include the subprime crisis in the USA which caused large f inancial institutions to shut down and apply for government bailouts. This crisis had effects all over the world, including in Asia and Europe as well as Thailand and presently the crisis is still severe and shows no signs of ending. In addition, internal risk factors from the unstable political situation as well as f luctuating gasoline and oil prices that increased to record prices in the f irst half of the year and then decreased without warning towards the end of the year, caused the price of raw construction materials to be unstable and made it difficult to estimate construction costs and caused the real estate market to slow down in general. However, despite the crisis, L.P.N. Development Public Company Limited (LPN) was only slightly affected, since the Company adjusted its development plan for new projects in the second half of the year 2008 in order to reduce the risk from f luctuating construction costs and in order to manage costs more eff iciently. The experience learned from the economic crisis in 1997, has caused the Company to be cautious in operating its business, by adjusting its management, by adjusting its thinking, its involvement and its internal mechanisms in order to be prepared to deal with various situations on short notice. The year 2008 was also the f irst year of stage 3 of the Company’s vision to develop products of the highest quality on a continual basis, by emphasizing the brand “Lumpini” by examining the Company’s true identity. In 2009, the Company plans to develop and communicate the brand to the public once again. All of this shows that the Company is dedicated to satisfying the residential needs of its customers while at the same time developing quality living and environment under the strategy “Vibrant Community” so that all of the families in the “Lumpini” society experience the real pleasure of living.

The Company has also been cautious in doing business under the principal of good governance as well as the sufficient economy philosophy which focuses on transparency and allows the Company to grow at an appropriate rate while providing profit from operations that ref lects the circumstances at the relevant time. The adjustment of the business plan has caused the Company to enjoy growth from 2007 at the rate of approximately 30% and holds up to 30% market share which is the top rank in residential condominium developers. The Company was able to pay dividends at a rate that increased from the previous year approximately 30% per share, which shows that the interests of all stakeholders have been taken care of. The Company’s pride is the fact that the Thai Institute of Directors rated the Company as a company with 4 Star Symbol of Good Governance for operating in accordance with principals of good governance with focus on disclosing information to investors, shareholders and the public transparently for the past 5 consecutive years. The Company received an award for excellent developers from the Consumer Protection Commission, Office of the Prime Minster which is awarded based on the status of the Company, its performance in the past, design and construction standards, responsibility towards consumers and society and consumer satisfaction. The Company also received an award as one of “200 Best Under a Billion” from the September edition of the magazine “Forbes Asia” in 2008 which surveyed 24,155 companies registered in stock markets in the Asia Pacific region with less than US$ 1 Billion of income with leading performances on a continual basis. The award that brings the Company the most pride is the fact 8 Annual Report 2008 L.P.N. Development Public Company Limited


that of the Company has earned the trust of the residents in “Lumpini” society and such trust is communicated to other customers which is proof that the Company is operating in accordance with its objective which endeavors to make the “Lumpini” brand a quality brand of the Thai people that stays in the hearts of customers forever. In 2008, despite the fact that the export sector and tourism will shrink and will cause unemployment to rise, in addition to problems caused by factors in the f inancial sector, which will cause the real estate sector to slow down in general, partly because many companies will wait to see the direction that the political and economic situation will take before embarking on new projects, the Company believes that the need for residences in the city will still exist on a continual basis. This can be proven by the fact that the Company unveiled the project Lumpini Ville Bangkae at the end of last year which received a warm welcome and the project was sold out within 3 hours. Therefore, the year 2009 should present opportunity for the Company in the midst of crisis. With this strength and readiness to manage high liquidity, management of products in stock, adjustment of the construction plan to be faster than schedule in all projects and use of the principal “Value Engineering” that focuses on improving value of products and services together with increase in the intensity of development of the eff iciency of management of the community and the government’s policy to stimulate the economy in 2009 with the real estate sector as the driving force using f inancial measures, treasury and tax measures. Based on these factors, they should push the company to grow approximately 10-15%. In 2009 the Company has plans to develop 6-8 new projects worth approximately Baht 12 Billion in the form of continuous projects located in places that the Company has found success in the past with a customer base that has faith and trust in the Company’s brand as well as developing projects in new locations using the project Lumpini Ville Bangkae as an example. The year 2009 will the 20th year of the Company’s operation and it will be twenty years that the Company will have accumulated experience, expertise and honesty in operating business based on the principal of good governance under the philosophy of suff iciency economy so that the Company is a quality organization that creates quality residences as well as quality society and environment while preserving the interests of all groups of stakeholders. Behind the Company’s success is the faith and support that has been received all along. Therefore, I would like to sincerely thank the shareholders, customers, f inancial institutions, alliances, the press, and government and private organizations as well as all executives and staff for dedicating themselves to create a product that pleases the customers and will bring satisfaction in the present and in the future.

Mr. Pakorn Thavisin Chairman

Annual Report 2008 L.P.N. Development Public Company Limited 9


Management of the Environment and Society The real estate development business has a direct affect on the environment and on society. Real estate that developers hand over which lacks quality creates problems for the environment and for society. The Board of Directors of the Company have therefore set a philosophy to create a balance in management that is efficient in all aspects, f inancially, for customers, stakeholders, staff and for managing the environment and has been included in the strategic f lowchart all along and has been made a goal under the Corporate Environment and Social Responsibility (CESR). Even though corporate social responsibility (CSR) normally includes responsibility to the environment, due to the conscientiousness of the Board of Directors of the Company, they want to reduce the impact on the environment as much as possible. Therefore the CESR is an important strategy of the Company. The operations of the Company in regard to the environment and the economy is comprised of 3 principals namely, Responsibility, Sharing and Networking. Responsibility starts with oneself. This means within the organization and within the community that is developed, before it can be shared with the public, and it its important to involve everybody such as staff, customers etc. according to the slogan “A good environment and society starts with us. If we’re ready, then we can spread to the community that we developed and f inally to the surrounding community”. This idea has led to practice in all parts of the organization and is the source of the Company’s policy to manage the community that is developed in all projects to be a “Vibrant Community” in society and an example of real estate developers in responsibility for the effects of real estate developed.

Operating with Responsibility to the Environment can be divided into 3 stages: Phase 1 Commencement of construction The idea of responsibility affects all levels of operation from the choice of the location to develop the project where there is a lack of quality residences that is near facilities, design and setting of the price to satisfy the needs of residents so they can be an owner more easily, addition of facilities that are basic needs in the projects. This allows for more perfect living, reduces commuting, energy consumption and solves the problem of traffic jams and allows for more family time and is the beginning of having a good quality of life. For example development of projects under the brand “Lumpini CondoTown” which has a goal to build the first residence for city dwellers starting at a price of only Baht 700,000 under community management that focuses on creating a good quality of life for residents, with plans to develop projects like these in areas with demand for residences on a continual basis. In addition, the focus on the environment also focuses on the use of alternative materials as much as possible to avoid using natural materials which destroy the environment. The size of the parts has been designed to coincide with industry standards to reduce waste materials that becomes garbage and gets released back into the environment as much as possible. Designs are also made to conserve energy and be easy to maintain buildings in the long term. The Company focuses on choosing strategic partners that have policies that are clear on the environment to cooperate on the project development. Phase 2 During Construction The Company focuses on complying with ways to reduce the affects in the economic impact report starting with analyzing the affect to buildings or the neighboring community both in terms of noise, dust, traff ic, by taking all precautionary measures, cleaning truck tires that transport materials when leaving the construction site to reduce damage to the roads, construction control to be in accordance with the plans and to be on time and reports on the preventive measures and affect from the construction. The Company has arranged for the highest ranking off icers of the Company to closely oversee the process for maximum efficiency as well as controlling construction contractor to comply with measures to prevent and reduce the effect of the construction as reported in the environmental impact assessment report and in accordance with what was said to the surrounding community. Phase 3 Post Development of the Project Following hand over of the projects and the units to the customers, the Company sets up a community management division to mange the community to have a standard of living that is appropriate under the ideal “Vibrant Community”. This not only maintains the equipment and assets to be ready for use and to be safe when used, but also is important in building a good society that is warm, safe and emphasizes the environment in all projects using the idea “Green, Clean, Lean” in public relations activities as well as campaigning for residents in the community to join in earnest. For example, the campaign for residents to separate garbage for recycling or reuse or using water from wells to water plants or the campaign to use cloth bags instead of plastic bags, reducing energy consumption in buildings to conserve energy. The Company also focuses on improving buildings and the environment in condominiums that the Company has constructed more than 10 years, by painting the buildings, increasing the green space and improving the environment in relation to the quality of life of residences in all its projects namely, Lumpini Tower, Lumpini Center Happyland, P.S.T. Condoville and P.S.T. City Home. 10 Annual Report 2008 L.P.N. Development Public Company Limited


Management of the Environment and Society The real estate development business has a direct affect on the environment and on society. Real estate that developers hand over which lacks quality creates problems for the environment and for society. The Board of Directors of the Company have therefore set a philosophy to create a balance in management that is eff icient in all aspects, f inancially, for customers, stakeholders, staff and for managing the environment and has been included in the strategic f lowchart all along and has been made a goal under the Corporate Environment and Social Responsibility (CESR). Even though corporate social responsibility (CSR) normally includes responsibility to the environment, due to the conscientiousness of the Board of Directors of the Company, they want to reduce the impact on the environment as much as possible. Therefore the CESR is an important strategy of the Company. The operations of the Company in regard to the environment and the economy is comprised of 3 principals namely, Responsibility, Sharing and Networking. Responsibility starts with oneself. This means within the organization and within the community that is developed, before it can be shared with the public, and it its important to involve everybody such as staff, customers etc. according to the slogan “A good environment and society starts with us. If we’re ready, then we can spread to the community that we developed and f inally to the surrounding community”. This idea has led to practice in all parts of the organization and is the source of the Company’s policy to manage the community that is developed in all projects to be a “Vibrant Community” in society and an example of real estate developers in responsibility for the effects of real estate developed.

Operating with Responsibility to the Environment can be divided into 3 stages: Phase 1 Commencement of construction The idea of responsibility affects all levels of operation from the choice of the location to develop the project where there is a lack of quality residences that is near facilities, design and setting of the price to satisfy the needs of residents so they can be an owner more easily, addition of facilities that are basic needs in the projects. This allows for more perfect living, reduces commuting, energy consumption and solves the problem of traffic jams and allows for more family time and is the beginning of having a good quality of life. For example development of projects under the brand “Lumpini CondoTown” which has a goal to build the first residence for city dwellers starting at a price of only Baht 700,000 under community management that focuses on creating a good quality of life for residents, with plans to develop projects like these in areas with demand for residences on a continual basis. In addition, the focus on the environment also focuses on the use of alternative materials as much as possible to avoid using natural materials which destroy the environment. The size of the parts has been designed to coincide with industry standards to reduce waste materials that becomes garbage and gets released back into the environment as much as possible. Designs are also made to conserve energy and be easy to maintain buildings in the long term. The Company focuses on choosing strategic partners that have policies that are clear on the environment to cooperate on the project development. Phase 2 During Construction The Company focuses on complying with ways to reduce the affects in the economic impact report starting with analyzing the affect to buildings or the neighboring community both in terms of noise, dust, traff ic, by taking all precautionary measures, cleaning truck tires that transport materials when leaving the construction site to reduce damage to the roads, construction control to be in accordance with the plans and to be on time and reports on the preventive measures and affect from the construction. The Company has arranged for the highest ranking off icers of the Company to closely oversee the process for maximum eff iciency as well as controlling construction contractor to comply with measures to prevent and reduce the effect of the construction as reported in the environmental impact assessment report and in accordance with what was said to the surrounding community. Phase 3 Post Development of the Project Following hand over of the projects and the units to the customers, the Company sets up a community management division to mange the community to have a standard of living that is appropriate under the ideal “Vibrant Community”. This not only maintains the equipment and assets to be ready for use and to be safe when used, but also is important in building a good society that is warm, safe and emphasizes the environment in all projects using the idea “Green, Clean, Lean” in public relations activities as well as campaigning for residents in the community to join in earnest. For example, the campaign for residents to separate garbage for recycling or reuse or using water from wells to water plants or the campaign to use cloth bags instead of plastic bags, reducing energy consumption in buildings to conserve energy. The Company also focuses on improving buildings and the environment in condominiums that the Company has constructed more than 10 years, by painting the buildings, increasing the green space and improving the environment in relation to the quality of life of residences in all its projects namely, Lumpini Tower, Lumpini Center Happyland, P.S.T. Condoville and P.S.T. City Home. 10 Annual Report 2008 L.P.N. Development Public Company Limited

In addition, the Company also emphasizes the quality of life and living conditions of the construction workers who run the risk of accident and loss of life from working, by providing standards of operation to prevent accidents that may occur and providing standards of safety while working for workers and contractors such as preventing workers from touching hazardous substances, use of protective equipment when working etc. with a division to oversee the safety directly which inspects the readiness of the site and is prepared to provide advice at all times to all workers. Importance is also given to sanity, with living quarters which have a good atmosphere and are appropriate, as well as taking an interest in the family members of the workers and maintaining health with exercises every morning.

Responsibility to Society can be divided into 3 phases: Phase 1 Society within the organization Society within the organization means all of the staff at all levels. The Company gives importance to making a quality life to all workers, as well as having a good working environment, promoting good work atmosphere to become a learning organization and building advancement for careers for all levels of staff. Staff have to have a work life balance. At the same time, the idea of working together is also promoted, by sharing, helping and being kind like being in the same family under the culture and value of the organization (Core Value) which has been passed on from each generation. There are also activities to build good relations from the Board of Director’s level to staff level, in order to reduce any gap between them, focusing on two way communication between executives and staff using communication channels within the organization as well as supporting involvement by staff in various activities both for the environment and for society to promote and teach good ideals to do good starting with the project “Nine Good Deeds” which started in the end of 2006 to jointly develop the community and society and the environment which was inspired by the good deeds done for the benefit and happiness of His Majesty the King. Phase 2 Society within the community of the projects developed by the Company With the Company’s continual growth, the number of projects that the Company has developed have risen and relate to the quality of life of residents in large societies. The Company has set a policy of managing the communities under the slogan “Vibrant Community”, with the Company focusing on developing the quality of life with good society and environment with high safety and promoting activities to build good relations with each other within the family and within members of the group “Lumpini” and supports involvement in sharing opinions and being involved in activities for the environment and society both within the project and to spread to society at large through internal social networks such as involvement in increasing the green area in projects, joining in renovating and developing 9 schools in Ayuthaya Province that were affected by the f loods, reading aloud to the blind and setting the policies with the owner’s committee together with the executives of the Company to develop a “Vibrant Community” that is sustainable, organizing activities on “Family Day” inside the project and taking part in cultural and customary activities. The Company also focuses on building understanding about living together which requires care, kindness and sharing to create friendship and happiness for residents. Phase 3 Public Society The Company gives special emphasis on the importance of communities within a 1 kilometer radius of the project, since this area may be affected during the development of the project. The Company has organized a team to visit such community and survey the affects on a continual basis as well as develop measures to prevent or reduce the affects that there may be on the community which can be divided according to the stage of development of the project in 2 stages as follows: 1. The stage before construction of the project (following acquisition of land) Before construction but following purchase of the land, the Company provides information to the people in the community to reduce problems that may affect the surrounding community as well as the relevant government off ices to create understanding and good relations between the community that surrounds the project, especially houses that are next to the project and are considered people who will lose benef its from the project as well as building good relations with the government off icers in charge of the area where the project is located to create conf idence in the community of the project. 2. Following up the affects during construction of the project During the construction of the project there may be effects on the environment of the community in many aspects. Therefore, the project has a team of off icers that surveys the situation by making questionnaires to follow up on the affect of the construction of the project as well as explaining the details of the project. The Company is aware of the quality of life of residents in the project and in the surrounding community and gives importance to all stages of the construction. In addition, there are also activities that are beneficial to the surrounding community especially schools, temples and other public places. In addition, the Company also supports the activities organized by the state, organizations and various foundations that have an objective to do improve society. Annual Report 2008 L.P.N. Development Public Company Limited 11


Sharing Another important principal, which is at the heart of all religious teaching is to give or to share which the Company has adhered to in its efforts towards the environment and society all along starting from within the organization as the center and expanding to the community and society at large pursuant to the policy of creating a balance which doesn’t only focus on profit for the business, but returns some of the profit to the customers and society, namely, the community surrounding the project developed by the Company and includes the people in other groups that want to help, hoping that it will be part of the beginning of the effort to build a stronger society and create conscientiousness in doing benefit for others. The type of activities include: • Activities for youth, including Activities on children’s day for schools in the community surrounding the project that the Company developed such as “Wad Tai” school, with a competition to decorate the classroom so that the youth can share their opinions which has been ongoing for the past 3 years as well as new experiences skills and knowledge for children who are underprivileged from foundations under the activity “Fun World Making the Dreams of Youth Come True” which is in its 4th year. • Activities for public health and medicine, such as Donating blood every three months under the Lumpini Tower project ever since 1996 and expanding the activities to other projects. The total blood donated was 10,561 units and was able to help 42,244 patients. There was also a donation drive to purchase equipment to help kidney patients at the red cross. • Environment activities, such as Growing mangrove forest at the Kings Project at Pak Bia Cape, increasing the green area for communities and areas close to the project which the Company developed • Campaigns for the environment and energy conservation, such as Public relations activities, inviting the surrounding community and the public to help reduce energy consumption, waste separation and reduction of the use of plastic, charity concert for the environment in association with the Thai Institute of Environment. • Religious activities, such as “Doing Good on Thursday” for customers and the public to pray and listen to sermons at Suthasthepwararam temple in Lumpini Tower every Thursday at 12:30 pm, support for novices at “Wad Tai” school and activities make merit in honor of the 60th anniversary of the King’s ascension to the throne and the King’s 80th birthday. • Building understanding about living in condominiums with the book City Life Which has been published for the past 3 years to create knowledge and understanding about living together which requires kindness, friendship and sharing and the book is given to the universities and the general public.

Creating a Social Network An important factor in operating successfully and expanding the benefits on a continual basis is the good ideals and joint efforts of everyone in the network. In all of the projects that the Company develops the company coordinates with the community to feel unity with the community and jointly cooperate to be happy with society as well as creating ideas for the development of the environment and society of the community to be better which is the way that has been going on all along such as the development of the project “Lumpini CondoTown Bodindecha-Ramkhamhaeng” which is a neighbor of Bodindecha Sing Singhasenee School. The Company joined with executives of the school to reduce the affects of the construction from the beginning of the project. In addition, they cooperated to hold activities that were beneficial to the community such as expanding the green area and sports competitions. In addition to environment and social responsibility, the Company engaged in other activities that were responsible to the environment and society as follows:

12 Annual Report 2008 L.P.N. Development Public Company Limited

1. Taking care of the environment in the workers quarters In addition to taking care of the construction area in the project and the people who live in the surrounding community near the construction the Company also cares for the quality of life of the workers so that they are happy and sanitary, with proper sanitary hygiene facilities, barbers, traditional massage and security 24 hours a day in all projects. 2. Creating good relations and surveying the community The Company has engaged in public relations activities and surveyed the community by providing information on the Company that is developing the project, the type of project being developed and by distributing questionnaires to the community that is near the project within 1 kilometer radius of the project. In 2008, the Company developed 5 condominiums namely, Lumpini Suite Pinklao, Lumpini Ville Ramkhamhaeng 26, Lumpini CondoTown Ratanathibet, Lumpini Rama 8, and Lumpini Place Rama 9 -Rachada.

Barber services and traditional massage for workers in the workers quarters

3. Blood Donation The Company joined with the National Blood Bank, Red Cross of Thailand to hold a blood donation on a continual basis for 3 months ever since 2006 which is 12 years. At first the Lumpini Tower was used as a center to attract assistance from staff and customers and the public, but there were still patients that needed treatment and more blood was needed so the Company expanded the blood donation drive to a project that could be a center for blood donation and in 2007 expanded to the Lumpini Plaza Asoke and Lumpini Sukhumvit 77 and 2008 expanded to Parkview Viphavadi, the Lumpini Ville Cultural Center and P.S.T. group buildings, which is yet another activity that the Company has done for society. In 2008, the Company held a drive to donate blood on a continual basis 24 times at 6 projects and a total of 3,429 units of blood were donated. The Company set a goal to increase the number of drives every year hoping to increase the number of donors that are residents in the community to be involved in public relations activities and communicate knowledge of health to others as well.

the project and campaign to reduce the use of plastic bags by using cloth bags instead.

The Company has a team of public relations officers to make questionnaires to obtain the opinions of the people that live near the project and campaign to reduce the use of plastic bags by using cloth bags instead. The number of people living in the immediate vicinity are as follows: 1) Lumpini Suite Pinklao 194 persons 2) Lumpini Ville Prachachun-Phongphet 144 persons 3) Lumpini Ville Ramkhamhaeng 26 232 persons 4) Lumpini Place/Suite Rama 8 233 persons 5) Lumpini CondoTown Ratanathibet 193 persons 6) Latphrao Project 25 persons The Lumpini Place Rama 9-Ratchada project did not have a public relations session or questionnaires since there are no residences near the project.

Annual Report 2008 L.P.N. Development Public Company Limited 13


1. Taking care of the environment in the workers quarters In addition to taking care of the construction area in the project and the people who live in the surrounding community near the construction the Company also cares for the quality of life of the workers so that they are happy and sanitary, with proper sanitary hygiene facilities, barbers, traditional massage and security 24 hours a day in all projects. 2. Creating good relations and surveying the community The Company has engaged in public relations activities and surveyed the community by providing information on the Company that is developing the project, the type of project being developed and by distributing questionnaires to the community that is near the project within 1 kilometer radius of the project. In 2008, the Company developed 5 condominiums namely, Lumpini Suite Pinklao, Lumpini Ville Ramkhamhaeng 26, Lumpini CondoTown Ratanathibet, Lumpini Rama 8, and Lumpini Place Rama 9 -Ratchada.

Barber services and traditional massage for workers in the workers quarters

3. Blood Donation The Company joined with the National Blood Bank, Red Cross of Thailand to hold a blood donation on a continual basis for 3 months ever since 2006 which is 12 years. At first the Lumpini Tower was used as a center to attract assistance from staff and customers and the public, but there were still patients that needed treatment and more blood was needed so the Company expanded the blood donation drive to a project that could be a center for blood donation and in 2007 expanded to the Lumpini Plaza Asoke and Lumpini Sukhumvit 77 and 2008 expanded to Parkview Viphavadi, the Lumpini Ville Cultural Center and P.S.T. group buildings, which is yet another activity that the Company has done for society. In 2008, the Company held a drive to donate blood on a continual basis 24 times at 6 projects and a total of 3,429 units of blood were donated. The Company set a goal to increase the number of drives every year hoping to increase the number of donors that are residents in the community to be involved in public relations activities and communicate knowledge of health to others as well.

the project and campaign to reduce the use of plastic bags by using cloth bags instead.

The Company has a team of public relations officers to make questionnaires to obtain the opinions of the people that live near the project and campaign to reduce the use of plastic bags by using cloth bags instead. The number of people living in the immediate vicinity are as follows: 1) Lumpini Suite Pinklao 194 persons 2) Lumpini Ville Prachachun-Phongphet 144 persons 3) Lumpini Ville Ramkhamhaeng 26 232 persons 4) Lumpini Place/Suite Rama 8 233 persons 5) Lumpini CondoTown Ratanathibet 193 persons 6) Latphrao Project 25 persons The Lumpini Place Rama 9-Ratchada project did not have a public relations session or questionnaires since there are no residences near the project.

Annual Report 2008 L.P.N. Development Public Company Limited 13


Table showing the volume of blood donated from the L.P.N. Development PCL mobile blood bank Center

Year

Lumpini Tower

Times/Year Volume of Blood (Units) Lumpini Sukhumvit 77 Times/Year Volume of Blood (Units) Lumpini Plaza Asoke Times/Year Volume of Blood (Units)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total 2 303

3 462

4 744

4 535

4 540

4 461

4 326

4 464

3 393

4 563

4 4 4 48 680 1,313 1,369 8,153 1 4 5 133 492 625 1 4 5 150 511 661

Parkview Viphavadi

Times/Year Volume of Blood (Units)

4 311

Lumpini Ville Cultural Center P.S.T. City Home

Times/Year Volume of Blood (Units) Times/Year Volume of Blood (Units)

4 312 4 429

Remark: Between 1996 and 2008 a total of 10,561 units of blood were donated which were able to help 42,244 patients calculated based on 300-400 cc of blood (1 unit) per 4 patients.

4. Activities organized for under privileged children on childrens day The Company organized activities for under privileged children from various foundations on children’s day and new year ever since 2005 under the name “Fun World Making Dreams Come True for Youth” to give children the opportunity to expand their imagination and creative ideas such as science, environment, music etc. as well as promoting exercise and using time well. Last year youth from 4 foundations, namely, Mahamek Foundation for Children and Youth, Baan Ratchvithee Girls Care Foundation, Thai Nimit Center Foundation and the Foundation for Rehabilitation of Children and Families, with a of total 200 persons taking part.

14 Annual Report 2008 L.P.N. Development Public Company Limited

4 311

4 312 4 429 Total 10,561

5. Building mud homes for the homeless in Chaiyaphum Province The Company joined the activity “Building mud homes for the poor, planting forest for the community in Phu Khiew Sub-District” organized by the Thai Mud Home group project and Monk/Teacher Paisal Visalo. The Company donated money to purchase materials to build three mud houses in Tha Mafaiwan Sub-District, Keawkrao District, Chaiyaphum Province in a total amount of 45,000 Baht. The Company also allowed staff customers in each project and the media to act as volunteers to build the mud houses and to plant trees for the community with the Thai Mud Home group and the villagers from Tha Mafaiwan Sub-District. 63 people joined the activity. The Company also donated 72,000 Baht to build 5 toilets for Phukaothong temple in Tha Mafaiwan Sub-District Keawkrao District, Chaiyaphum Province which was used as accommodation and as a place to learn how to make mud homes.


Activities to promote management of the environment 1. Expansion of green area in the community and public area in the community near construction sites The Company places great importance on the policy of expanding the green are in order to increase oxygen and the area for city people to rest. The Company finds public areas in communities near the construction site first and tries to develop it together with the existing community where the Company is developing the project so that there will be long lasting cooperation. In 2008 the Company developed and renovated a total of 3 green areas as follows:

2. Expanding the green area in the projects developed by the Company with residents One of the Company’s main policies is to increase the green space in projects with a goal to make all of the communities vibrant. In 2008 the Company allocated funds to increase and develop green area in projects which the Company has developed with residents already moved in to be in pristine, beautiful shady condition as a place to relax for residents. In 2008 the Company renovated and expanded the green space in 10 projects.

1) The park and fitness area at Moo Ban Kred Keaw which is near to Lumpini Ville Prachachun-Phongphet with approximately 200 square meters of space with the hope that the space can be used to relax and a place to meet and to exercise for the community. The park and fitness area at Moo Ban Kred Keaw

The park, SapanMai Community

2) The park and childrens playground, SapanMai Community The Company constructed a small park and renovated a children’s playground next to Lumpini Place/ Suite Rama 8 with more than one thousand people living there to be the community center to exercise, meet socialize or do any activities together. 3) Pavillion at the Lotus Pond, Lumpini Park The Company renovated the pavilion around the lotus pond at Lumpini Park including the island in the middle of the pond and the fountain planting water plants that provide shade in place of fern trees that were old and some had already died hoping that the location would be a beautiful place for city people to relax.

Children’s playground, SapanMai Community

Pavillion at the Lotus Pond, Lumpini Park

Annual Report 2008 L.P.N. Development Public Company Limited 15


3. Waste Separation As the community developer and manager both for amount of garbage that has to be destroyed and may be reused. off ices and condominiums with more than 50 properties at present. In 2008 the Company started to educate people on waste from Based on information provided by BMA, 1 resident creates buildings under two programs: approximately 0.8-1 kilogram of waste per day. That means that condominiums are a source of waste that can be a burden 1) Disposal of dangerous waste for managers of all on BMA that has to dispose of garbage. Presently BMA has community projects and for off icers of the dangerous waste approximately 8,500 tons of garbage/year or 23.28 tons per day. disposal unit of BMA This garbage may affect the environment and the living quality 2) Separation of waste for the heads of maids in charge of people and if not treated properly, it will turn into a breeding of cleaning all buildings presented by off icers from the ground for animals and disease, such as rats, roaches, flies and Foundation for Development of the Environment and Energy will spread disease such as typhoid, dysentery, skin disease, together with the dangerous waste disposal unit of BMA tetanus, respiratory disease and there will be toxic chemicals and the Department of Pollution Control with garbage cans such as lead, mercury, which will seep into the ground and water according to the standard of the Department of Pollution sources which will cause waste water, clogged up drains and Control installed at 10 projects to campaign for residents to will cause flooding as well as pollution such as dust, soot, separate their garbage properly. smoke from burning garbage and methane gas from buried garbage. Some types of garbage do not dissolve and are hard to destroy such as foam, plastic which leave a residue on the environment.

Under the policy of managing a “Vibrant Community” in a sustainable manner, everyone is considered an important part of the effort to preserve natural resources and the environment. Therefore, the Company started “Garbage Separation with LPN” program starting with the addition of garbage cans certif ied by the Department of Hazardous Substances in all projects to handle poisonous waste from residents, such as light bulbs, f lash light batteries, batteries, spray cans etc. to separate this waste from other types of waste, being well aware that even small amounts of this waste if mixed with other waste and not disposed of properly, may effect the health of residents and become a burden of BMA as well as an environmental problem. Apart from dangerous waste, recycled waste must also be separated to reduce the

16 Annual Report 2008 L.P.N. Development Public Company Limited

4. Activity of LPN to turn of the lights for 1 hour The Company invites residents in all projects to support turning off the lights for 1 hour to reduce global warming according the WWF (World Wild Life Federation) that joined with BMA and 23 cities around the world on 29th March 2009 between 8pm and 9pm. As a result, more than 50 members of the projects joined in being one with the world by turning off the lights for 1 hour helping to save 5,220 kilowatts of electricity, down from Saturday 22th March 2008 by 35.62% or worth Baht 18,272.17.


5. Say no plastic In light of the natural disasters occurring these days, which comes from the global warming which is getting more and more severe, staff in the office and at the projects are joining in a campaign to say no plastic to reduce use of plastic bags. This activity gives staff a chance to be involved in being responsible for the environment and society. This activity started on 24th May 2008 and ended in December 2008. The amount of plastic which staff refused over the 7 month period equaled 9,253 bags which would be enough fuel to allow a vehicle to run 1,063 kilometers.

LPN NO SAYASTIC PL Annual Report 2008 L.P.N. Development Public Company Limited 17


Management of Product Brand or Brand “Lumpini” In a present business operation climate which severe competition is under-gone for snatching customers or consumers to decide to purchase or use product of entrepreneurs, building of customers conf ident toward the product through a creation of the brand is importantly targeted by entrepreneurs, apart from an acquisition of a good operational result. Several entrepreneurs have spent tremendous budget to build their product brand and majority of them believe that “brand” is not only a mechanism to present their product but also being a tool in building conf ident to consumers.

Development of Product Groups

Philosophy in operating business of the Company emphasizes on creating a balance of all dimension by not only focus on success of the operational result but also on building customers conf ident. These are achieved by carrying favorable product and service (over expectation) either in aspect of product quality, commitment adherence, fair or appropriate pricing determination as well as a rapid construction specially in welcoming customers to take part in society management subsequent to delivery of the project to the customers.

“Lumpini Suite” and “Lumpini Place”

All of aforesaid mention has been adopted as guideline of the Company for over 15 years for which is proven to the customers of the Company’s endeavour, intention and exertion, resulting in an acquisition of conf ident in brand “Lumpini”. Numerous of customers have acknowledged and memorized “Lumpini” other than the name of organization “L.P.N. Development Public Company Limited “Lumpini” brand is therefore regarded as highly valuable intangible asset of the Company. Accordingly expenses for advertisement and sale promotion of the projects become the lowest expense as compared to the same group of business (No more than 1% of project sale f igure). This is as a consequence of words of mouth of customers who conf ident in “Lumpini” brand. In year 2008 the Company has seriously conducted an analysis of substance of “Lumpini” brand by clearly determining and targeting an acknowledgement to the core of “Lumpini”, so as to determine a strategy in keeping, developing and lasting “Lumpini” long and stable. As a result of the analysis toward the meaning and symbol of brand “Lumpini”, “Vibrant Community” concept is generated def ining as “Real Pleasure of Living”. Additionally in order to create a vivid brand of the Company and convey the core of “Lumpini”, the Company has developed symbol of the Company including vibrant community and new group of products symbol as follows:

Organization symbol

Vibrant Community symbol

Light Blue Color : representing warm, friendly, easy to access and sincere. Green Color : representing fresh, grow, shady, relax and natural. Dark Blue Color : being the Company’s color representing self and participation of the Company with community residential. And for the year 2009, the Company has continuingly planed to communicate to build conf ident and good understanding toward the Company’s brand to customers, target groups of customers and public.

18 Annual Report 2008 L.P.N. Development Public Company Limited

In regard to development of product groups under “Lumpini” brand, the Company has importantly focus on development of products, responsive to the need of customers (Customer Focus) by studying from living life of customers, generating products under the 3 main groups of products, continuingly developed which are:

The Project and residential condominium have an area over 34 square meters, pricing between Baht 45,000-60,000 per square meters, developed for responding the residential need of working people being an upper-middle management, having incomes between Baht 50,000-80,000 per month, enabling to a residential expenditure in an approximately amount of Baht 10,000-20,000, having a good level of f inancial status and power to spend for happiness and convenient in life. Location for development of this product is therefore in a high-crowded area which may be located in the centre or circle of business centre (CBD), conventionally traveling by mass transit, complete in facilities and close to facilities needed in daily life as well as attaching to decoration indicating status of resident in spending life with good class. Needs: “Completed happiness with social status” Real Pleasure in their living: “Perfect with class” “Lumpini Ville” The Project and residential condominium have an area between 30-60 square meters in studio style both with 1 bedroom and 2 bedrooms, averge pricing between Baht 35,000-45,000 per square meters, developed for responding the residential need of working people who may be a premanagement in age of not over 35 years, having incomes between Baht 30,000-50,000 per month, demanding convenience in traveling and private residential, enabling to a residential expenditure in an approximately amount of Baht 5,000-10,000, have suff icient incomes for daily life spending, not much obligations, being youngster needing life award. Location for development of this product is therefore in a high-crowded area, close to working source and department store. “Lumpini Ville” brand therefore is the choice of new generation needing a self living life while still living close to their family. Needs: “Giving happiness to itself and closed person” Real Pleasure in their living: “Reward price to life” “Lumpini Centre” and “Lumpini CondoTown” ” “Lumpini CondoTown” is a new brand continuingly developed from “Lumpini Centre” brand in order to build residential with good quality of life to the groups of customers who are wording people just starting to work. Development of the project and residential condominium having an area between 25-28 square meters, pricing between Baht 25,000-35,000 per square meters for “Lumpini Centre” and pricing between Baht 600,000-700,000 per unit for “Lumpini CondoTown” is for building home surrounding with good quality of life for just starting working people, independent professional, having incomes between Baht 15,000-30,000 per month, enabling to a residential expenditure in an approximately amount of Baht 3,500-5,000. Location for development of this product is therefore in a border of city centre and suburb with high-crowded area. This group of customers normally have original work place or residential far from the location of the project not over than 5 K.M. radius which is a big group who have high demand of residential. The Company therefore locates “Lumpini CondoTown” as the core target of the Company’s residential development. This is for being the f irst home with quality and initiation of warm family, to the target in the age of just starting working people. Needs: “Chance for life” Real Pleasure in their living: “Initiation that creates a better and happiness living”

Annual Report 2008 L.P.N. Development Public Company Limited 19


Management of Product Brand or Brand “Lumpini” In a present business operation climate which severe competition is under-gone for snatching customers or consumers to decide to purchase or use product of entrepreneurs, building of customers conf ident toward the product through a creation of the brand is importantly targeted by entrepreneurs, apart from an acquisition of a good operational result. Several entrepreneurs have spent tremendous budget to build their product brand and majority of them believe that “brand” is not only a mechanism to present their product but also being a tool in building conf ident to consumers.

Development of Product Groups

Philosophy in operating business of the Company emphasizes on creating a balance of all dimension by not only focus on success of the operational result but also on building customers conf ident. These are achieved by carrying favorable product and service (over expectation) either in aspect of product quality, commitment adherence, fair or appropriate pricing determination as well as a rapid construction specially in welcoming customers to take part in society management subsequent to delivery of the project to the customers.

“Lumpini Suite” and “Lumpini Place”

All of aforesaid mention has been adopted as guideline of the Company for over 15 years for which is proven to the customers of the Company’s endeavour, intention and exertion, resulting in an acquisition of conf ident in brand “Lumpini”. Numerous of customers have acknowledged and memorized “Lumpini” other than the name of organization “L.P.N. Development Public Company Limited “Lumpini” brand is therefore regarded as highly valuable intangible asset of the Company. Accordingly expenses for advertisement and sale promotion of the projects become the lowest expense as compared to the same group of business (No more than 1% of project sale f igure). This is as a consequence of words of mouth of customers who conf ident in “Lumpini” brand. In year 2008 the Company has seriously conducted an analysis of substance of “Lumpini” brand by clearly determining and targeting an acknowledgement to the core of “Lumpini”, so as to determine a strategy in keeping, developing and lasting “Lumpini” long and stable. As a result of the analysis toward the meaning and symbol of brand “Lumpini”, “Vibrant Community” concept is generated def ining as “Real Pleasure of Living”. Additionally in order to create a vivid brand of the Company and convey the core of “Lumpini”, the Company has developed symbol of the Company including vibrant community and new group of products symbol as follows:

Organization symbol

Vibrant Community symbol

Light Blue Color : representing warm, friendly, easy to access and sincere. Green Color : representing fresh, grow, shady, relax and natural. Dark Blue Color : being the Company’s color representing self and participation of the Company with community residential. And for the year 2009, the Company has continuingly planed to communicate to build conf ident and good understanding toward the Company’s brand to customers, target groups of customers and public.

18 Annual Report 2008 L.P.N. Development Public Company Limited

In regard to development of product groups under “Lumpini” brand, the Company has importantly focus on development of products, responsive to the need of customers (Customer Focus) by studying from living life of customers, generating products under the 3 main groups of products, continuingly developed which are:

The Project and residential condominium have an area over 34 square meters, pricing between Baht 45,000-60,000 per square meters, developed for responding the residential need of working people being an upper-middle management, having incomes between Baht 50,000-80,000 per month, enabling to a residential expenditure in an approximately amount of Baht 10,000-20,000, having a good level of f inancial status and power to spend for happiness and convenient in life. Location for development of this product is therefore in a high-crowded area which may be located in the centre or circle of business centre (CBD), conventionally traveling by mass transit, complete in facilities and close to facilities needed in daily life as well as attaching to decoration indicating status of resident in spending life with good class. Needs: “Completed happiness with social status” Real Pleasure in their living: “Perfect with class” “Lumpini Ville” The Project and residential condominium have an area between 30-60 square meters in studio style both with 1 bedroom and 2 bedrooms, averge pricing between Baht 35,000-45,000 per square meters, developed for responding the residential need of working people who may be a premanagement in age of not over 35 years, having incomes between Baht 30,000-50,000 per month, demanding convenience in traveling and private residential, enabling to a residential expenditure in an approximately amount of Baht 5,000-10,000, have suff icient incomes for daily life spending, not much obligations, being youngster needing life award. Location for development of this product is therefore in a high-crowded area, close to working source and department store. “Lumpini Ville” brand therefore is the choice of new generation needing a self living life while still living close to their family. Needs: “Giving happiness to itself and closed person” Real Pleasure in their living: “Reward price to life” “Lumpini Centre” and “Lumpini CondoTown” ” “Lumpini CondoTown” is a new brand continuingly developed from “Lumpini Centre” brand in order to build residential with good quality of life to the groups of customers who are wording people just starting to work. Development of the project and residential condominium having an area between 25-28 square meters, pricing between Baht 25,000-35,000 per square meters for “Lumpini Centre” and pricing between Baht 600,000-700,000 per unit for “Lumpini CondoTown” is for building home surrounding with good quality of life for just starting working people, independent professional, having incomes between Baht 15,000-30,000 per month, enabling to a residential expenditure in an approximately amount of Baht 3,500-5,000. Location for development of this product is therefore in a border of city centre and suburb with high-crowded area. This group of customers normally have original work place or residential far from the location of the project not over than 5 K.M. radius which is a big group who have high demand of residential. The Company therefore locates “Lumpini CondoTown” as the core target of the Company’s residential development. This is for being the f irst home with quality and initiation of warm family, to the target in the age of just starting working people. Needs: “Chance for life” Real Pleasure in their living: “Initiation that creates a better and happiness living”

Annual Report 2008 L.P.N. Development Public Company Limited 19


Development of LPN’s Condominium

Throughout the period of nearly 2 decades of the Company’s real-estate development, it can be seen that material change and development has been periodically made, that does not only result from the dimension, thinking method and internal management adjustment but also from the profound research and study of the behavior and residential demand of the customers. These constitute a creation and initiation of new products and services for conformity with the customers’ demand, resulting that the projects developed under “Lumpini” brand has always been well responded. The important development can be divided into 5 periods as follows:

First Period: Years 1989-1998 :Project Development of Various Kind of Products

As this was the first period of business operation, the project development has been carried out in various styles either in form of off ice building, condominium, mini off ice or townhouse. Both developed off ice building and condominium were mostly of the high rise building causing the Company was named as “High Rise Expertise”. Besides, the Company was also deemed as a pioneer developer in a new location (Blue Ocean Strategy) such as area in the Rama 4 Road and Rama 3 Road. Such projects have contributed a civilization and increased in residential demand in such area. The said projects are as follows: Lumpini Tower worth of Baht 2,120 million 38 storey off ice building totaling 113 units, in area of 2-3-33 Rai, located at Rama 4 Road

P.S.T. Condoville Towers 1, 2 worth of Baht 1,944 million 2 buildings of 22 storey residential condominium totaling 1,545 unit in area of 6-2-78.7 Rai, located at Nonsee Road L.P.N. Tower worth of Baht 564 million 18 storey off ice building totaling 76 units, in area of 1-2-42 Rai, located at Ratchadapisek RoadNang Linchi Intersection

P.S.T. Mini Off ice worth of Baht 188 million 10 buildings of 7 storey semi-off ice and residential condominium in area of 4-1-35 Rai, located at Nonsee Road

Lumpini Place worth of Baht 408 million 19 storey residential condominium totaling 34 units, in area of 1-3-26 Rai, located at Sri Bumpen Road

Siphaya River View worth of Baht 1,009 million 31 storey residential condominium totaling 308 units in area of 2-0-16.6 Rai, located at Yotha Road, opposite Samphanthawongse District Office P.S.T. City Home worth of Baht 1,103 million 29 storey residential condominium totaling 766 units, in area of 4-1-34.2 Rai, located at Nonsee Road

L.P.N. Mini Off ice worth of Baht 29 million 7 storey off ice building, in area of 90 Square Wah, located at Ratchadapisek Road, Nang Linchi Intersection

20 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Baan Lumpini Bang Bua Thong worth of Baht 725 million 2 storey Townhouses and commercial buildings totaling 709 units in area of 36-1-31.2 Rai, located at Talingchan-Supanburi, Bangbuathong Road

Baan Lumpini 2 Bang Bua Thong worth of Baht 75 million 3 storey commercial buildings totaling 35 units in area of 2-1-84.9 Rai, located at Talingchan-Supanburi, Bangbuathong Road

The Second Period : Years 1999-2003 : Commencement of City Condo

The Company was deemed to be a pioneer and initiative developer of the condominium in Bangkok once again by awakening a fever of “City Condo” or condominium with the price of Baht 1 million plus located along BTS line to be widely accepted. This deemed to be the model of the project development for other entrepreneurs. With the non-stop thinking approach even in the economic crisis, the Company has been well-known and accepted in aspect of rapidity in all of new project’s sale closure by breaking a record of the sale closure for whole project within only 3 hours. As the Company has emphasized the development of the condominium which is in the Company’s expertise, the Company, therefore, has been in trust worthiness as the leader of the city condominium developer. Besides, the factor leading to a continued success also comprised of operational strategy which were determination of clear target group (Focus Strategy) to the moderate income target group, differentiation of product, continuously developed by the Company (LPN Design), from the Company’s competitors (Product Differentiation) and focusing on a provision of services in all life cycle of the customers. This was in especially on the condominium management, when the project become bigger, the concept in management was changed to be a management of the community under “Vibrant Community”. The last factor is the development of the rapid construction process (Speed) enabling the project’s construction to be completed within only 1 year. Lumpini Place Sathorn worth of Baht 715 million 4 buildings of 9-Storey with 1 Basement Residential Condominium totaling 603 units in area of 3-2-52.6 Rai, located at Narathiwat Ratchanakarin Road Lumpini Place Suanplu-Sathorn worth of Baht 378 million 2 buildings of 9 storey residential condominium totaling 281 units in area of 2-2-22.5 Rai, located at Suanplu Soi 8, Sathorn Road Lumpini Center Happyland worth of Baht 926 million 20 buildings of small residential condominium totaling 1,765 units and 3.75 storey of commercial building totaling 23 units in area of 14-0-7.2 Rai, located at Happyland Road Soi 1 and 2 Lumpini Center Latphrao 111 worth of Baht 879 million 4 Buildings of 8 storey residential condominium totaling 534 units and 3 buildings of 9 storey residential condominium totaling 322 units in area of 5-5-7 Rai, located at Latphrao Road Soi 111

Lumpini Place Rama 4-Sathorn worth of Baht 412 million 2 buildings of 9 storey residential condominium totaling 231 units in area of 2-0-98 Rai Soi Sri Bumpen

Lumpini Residence Sathorn worth of Baht 94.14 million 9 storey service apartment totaling 38 units, in area of 0-0-199 Rai, located at Narathiwat Ratchanakarin Road ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Lumpini Place Narathiwat 24 worth of Baht 359 million 2 buildings of 9 storey residential condominium totaling 190 units, in area of 2-0-25 Rai, located at Narathiwat Ratchanakarin Road

Lumpini Place Narathiwatratchanakharin worth of Baht 485 million 2 buildings of 9 storey residential condominium totaling 233 units, in area of 2-2-11.2 Rai, located at Narathiwat Ratchanakarin Road Lumpini Suite Sukhumvit 41 worth of Baht 492 million 2 buildings of 9 storey residential condominium totaling 159 units, in area of 1-2-78 Rai, located at Sukhumvit Road

Lumpini Place Rama 3Charoenkrung worth of Baht 495 million 2 buildings of 9 storey residential condominium totaling 312 units, in area of 2-3-65.1 Rai, located at Rama 3 Road Lumpini Ville Mary - Sathorn worth of Baht 459 million 2 buildings of 9 storey residential condominium totaling 300 units, in area of 2-3-65 Rai, located at Chan Road

The Third Period : Year 2004 : Development of Medium Rise Condominium

The project development of the Company in this period commenced with the development of the higher height residential condominium which were approximately of 20 floors by utilizing integrated technology between the construction or casting made within the project area and the pre-casting. Besides, the Company also developed the construction process which was enabling the Company to perform the construction work in each part at the same time, while the former process must be performed in periodical order. A rapid construction, therefore, was achieved by the Company while the quality could also be maintained, resulting in delivery could be made to the customers as per the determined schedule. Lumpini Place Rama 3-Riverview worth of Baht 1,048 million 19 storey residential condominium totaling 497 units, in area of 3-0-65.10 Rai, located at Rama 3 Road

Lumpini Ville Phahon-Sutthisarn worth of Baht 1,428 million 2 buildings of 21 storey residential condominium totaling 861 units, in area of 5-0-76.9 Rai, located at Suthisarnvinijchai Road Lumpini Center Sukhumvit 77 worth of Baht 915 million 5 buildings of 9 storey residential condominium totaling 872 units, in area of 6-2-30.2 Rai, located at Sukhumvit Road

22 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

Lumpini Center Nawamin worth of Baht 388 million 3 buildings of 8 storey residential condominium totaling 442 units, in area of 3-2-65.7 Rai, located at Happyland Road Soi 2


Lumpini Ville Sukhumvit 77 worth of Baht 1,569 million 3 buildings of 23 storey residential condominium totaling 987 units, in area of 4-3-29.8 Rai, located at Sukhumvit Road

Lumpini Place Pinklao worth of Baht 1,106 million 22 storey residential condominium totaling 580 units, in area of 3-0-33 Rai, located at Bharomratchachonnanee Road

The Forth Period : Year 2005 : Small Size Township Development

Apart from the development of products as per the residential demand, the main principle in the project development of the Company was an emphasis on the management subsequent to delivery of the condominium unit to the customers. The project development in this period comprised of the Lumpini Ville Cultural Center project as a pioneer project, being a large project comprising of group of buildings within the project and having units more than City Condo Project for 5 times. This project deemed as the Small Size Township surrounded by completed facilities both inside and outside the project under “Total Solution� concept which comprises of Security Facilities, Living Facilities, Food & Beverage Facilities, Sport Facilities, Entertainment Facilities, Financial Facilities, Health Facilities, Transportation Facilities and Education Facilities. Lumpini Ville Cultural Center worth of Baht 1,954 million 9 buildings of 8 storey residential condominium totaling 1,390 units in area of 112-2-63 Rai located at Pracha U-thit Road Lumpini Place Ratchada-Thapra worth of Baht 1,655 million 2 buildings of 29 storey residential condominium and 1 building of 8 storey residential condominium totaling 898 units, in area of 5-2-92 Rai, located at Ratchadapisek Road Lumpini Place NarathiwatChaophraya worth of Baht 3,547 million 3 buildings of 29 storey residential condominium totaling 1,306 units in area of 9-0-72 Rai, located at Rama 3 Road

Lumpini Place Pinklao 2 worth of Baht 1,186 million 1 building of 26 storey residential condominium totaling 621 units, in area of 3-3-83.3 Rai, located at Baromratchachonnanee Road

Lumpini Place Phahon-Saphankwai worth of Baht 2,235 million 2 buildings of 29 storey residential condominium totaling 1,093 units, in area of 7-1-68 Rai. located at Phadiphat Road

Lumpini Ville Ramkhamhaeng 44 worth of Baht 1,302 million 2 buildings of 23 storey residential condominium totaling 827 units, in area of 4-2-56 Rai, located at Ramkhamhaeng 44 Road

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Lumpini CondoTown Bodindecha-Rakhamhaeng worth of Baht 3,025 million 14 buildings of 8 Storey residential condominium totaling 3,445 units in area of 32-3-23 Rai located at Ramkhamhaeng 43/1 Road

The Fifth Period : Year 2006 until present : Development of “Lumpini CondoTown” brand for responding the residential demand

The Company’s growth is strengthened by the experience accumulated in project development and the profoundness of the developer’s concept as well as the policy in building the first and quality home to low-high target groups who are unable to have their own residence. The project development has made under “Lumpini CondoTown” brand by launching the Lumpini CondoTown Bodindecha-Ramkhamhaeng as the first project in year 2007. At present, the customers have already resided in such a project under the “Vibrant Community” management initiated by the Company to develop a good quality of life, both in environmental and social aspect, having the completed facilities and services in the project, receive of pleasantly warm and safe for creating the actual happiness from inhabitants. The Company will apply “Lumpini CondoTown” brand as flagship in developing the project for the next 5 years. At present, 3 projects has been launched for sale and has been incredibly well responded. Apart from developing “Lumpini CondoTown” brand, the Company also pays attention to the project development under other succeed brands leading to continuously reputation of the Company. Among the non-confidence of the economic and political situation, the launching of “Lumpini Ville Bangkae” project at late 2008 has found to be well responded. This proves of the vision of the management, an accuracy of business operation resulting from extremely research and the non-stop development of new style of working procedure at all time, which assists in recovering the confidence over the real-estate business. Lumpini CondoTown Ramindra-Laksi worth of Baht 1,257 million 7 buildings of 8 Storey residential condominium totaling 1,568 units, in area of 13-0-40 Rai, located at Ramindra Road near Central Ramindra Department Store Lumpini Suite Pinklao worth of Baht 1,352 million 21 Storey residential condominium totaling 547 units, in area of 3-1-67 Rai, located at Boromratchachonanee Road Lumpini Ville Ramindra-Laksi worth of Baht 1,366 million 14 Storey residential condominium totaling 1,271 Units, in area of 7-2-58.3 Rai, located at Ramindra Road near Central Ramindra Department Store

Lumpini CondoTown Ratanathibet worth of Baht 1,666 million 8 buildings of 8 Storey residential condominium totaling 1,949 units, in area of 19-0-59.1Rai, located at Ratanathibet Road

Lumpini Ville PrachachunPhongphet worth of Baht 1,346 million 2 buildings of 19 Storey residential condominium totaling 958 units, in area of 7-3-83.8 Rai, located at Prachachun Road

Lumpini Ville Ramkhamhaeng 26 worth of Baht 1,361 million 5 buildings of 8 Storey residential condominium totaling 998 units, in area of 10-2-74 Rai, located at Ramkhamhaeng Road

24 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Lumpini Rama 8 worth of Baht 2,374 million 1 building of 12 Storey and 4 buildings of 13 Storey residential condominium totaling 1,313 units, in area of 12-1-29.7 Rai, located at Arun-amarin Road

Lumpini Ville Bangkae worth of Baht 295 million 22 Storey residential condominium totaling 271 units, in area of 2-0-38 Rai, located at Petchakasem Road

Lumpini Place Rama 9-Ratchada worth of Baht 2,887 million 2 buildings of 25 Storey and 2 buildings of 30 Storey residential condominium totaling 2,365 units, in area of 15-1-0 Rai, located at Rama 9 Road

Lumpini Place Ramindra-Laksi worth of Baht 700 million 14 Storey residential condominium totaling 509 units, in area of 4 Rai, located at Ramindra Road near Central Ramindra Department Store

Joint Venture Projects in Grand Unity Development Co., Ltd Lumpini Place WaterCliff worth of Baht 1,425 million 4 buildings of 36 storey residential condominium totaling 620 units, in area of 4-0-40.4 Rai, located at Ratchadapisek-Rama 3 Road, besides Central Rama 3 Department Store

Grand Heritage Thonglor worth of Baht 350 million 8 storey with 1 basement residential condominium totaling 74 units, in area of 1-0-1 Rai. located at Sukhumvit Road (Soi Thonglor 13)

Lumpini Townhome Ratchada-Rama 3 worth of Baht 280 million 4.5 storey townhouse totaling 28 units, in area of 2-2-2.5 Rai, located at Ratchadapisek-Rama 3 Road, besides Central Rama 3 Department Store

Grand Parkview Asoke worth of Baht 135 million 32 storey with 2 basement flf loor and 4 storey retail commercial area and 481 residential units, in area of 3-1-98 Rai, located at Sukhumvit 21 Road (Asokemontri)

Lumpini Suite Ratchada-Rama 3 worth of Baht 250 million 9 storey residential condominium totaling 53 units, in area 0-0-368 Rai, located at Ratchadapisek-Rama 3 Road, besides Central Rama 3 Department Store

Parkview Viphavadi worth of Baht 1,000 million 17 Buildings of 8-storey and 1 building of 5 storey residential condominium totaling 1,011 units, in area of 15-2-26.9 Rai, located at Viphavadi Rangsit Road

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

25


Future Projects

The Company adjusted development of its projects in the middle of 2008 due to the fluctuation of the price of oil and the economic crisis in the United States that spread across the globe, as well as due to domestic political unrest, all of which caused consumers to lose confidence and delay their decision to make purchases. The Company used this period to adjust the efficiency of its operations, its management, the restructuring of its organization as well as reserve funds in order to strengthen its organization to face the crisis and to expand projects in 2009. Based on the evaluation of the situation in general regarding the domestic and international situation, the Company sees a good opportunity to expand development of projects, especially in the second half of 2009, in which the general situation should become clearer both in regard to the domestic situation and the international situation. In addition to this, the competition has decreased while the demand of consumers for residences has accumulated from the middle of last year, especially amongst middle income earners who are the target group of customers that the Company has always focused on. Accordingly, the Company plans to develop approximately 6-8 residential condominium projects jointly worth approximately Baht 10-12 Billion. Construction is expected to be complete and the income will be realized in 2009-2010. The Company has developed an important strategy to develop projects this year as follows: 1. Develop projects on a continual basis in locations that are located near projects that have been successful and where there is continual demand, based on the number of people who have visited the projects or the constant demand to purchase units based on the information and following up of the sales department and the brokerage department. 2. Expand locations to develop projects in densely populated areas together with facilities where there are no competitors or few competitors (First Mover), utilizing the strategy of competitive prices together with development of products (Product Differentiation) in order to satisfy the demands for living in the city as much as possible, such as the Lumpini Ville Bangkae Project, which the Company has achieved huge success with after opening at the end of 2009. 3. Adjust the method of developing projects, from developing large scale projects that have been completed all at once in order to gain the advantage of Economies of Scale, namely, developing projects over several phases to coincide with demand in each period as has been done with projects in the past which the Company developed during the economic downturn, which will reduce the Company’s risk of holding stock. 4. Increase efficiency in cost leadership, especially the indirect costs to set sale prices that coincide with the demand of consumers and maintain compensation at appropriate levels. 5. Adjust and develop systems to develop projects as well as process innovation at the same time as developing products to absorb the risk from business operations. 6. Maintain the efficiency of community management with the goal to improve the quality of life of residents under the strategy “Vibrant Community” which is the goal and the direction of the future. The slogan “Vibrant Community” is like an index or quality guarantee of the Company’s community management which makes the Company’s projects stand apart from the projects developed by its competitors (Service Differentiation) 7. Focus on Corporate Environment and Social Responsibility (CESR) as well as on the entire system that relates to Corporate Environment and Social Responsibility set by the Company for growth on a continual basis. 8. Develop and communicate the brand over a wide scope (Brand Communication) to create awareness and memory which will lead to differentiation and acceptance of projects developed by the Company, especially regarding quality of life under the slogan “Vibrant Community”. There are approximately 3-4 projects or locations that are under consideration regarding the appropriateness of the land which the Company expects to open in the first half of the year (one of which has been opened, namely, Lumpini Place Ramindra-Laksi) include: 1. Lumpini Ville Prachachun-Phongphet 2 2. Lumpini CondoTown Ramindra 3. Lumpini CondoTown Bangkae In the second part of 2009, the Company has plans to launch 3-4 projects, consisting of ongoing projects and projects in new locations, in order to support the expansion of residences, based on the appropriateness of opening of projects in each period as well as other issues that may affect the decision to purchase land.

26 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Summary of the Real Estate Business in 2008 and Trends for 2009

The year 2008 saw economic and political uncertainty which caused the real estate business to slow down compared to 2007. This was caused by the following main factors: • Political situation that lacked stability • Economic slowdown beginning in 2008 • Costs that fluctuated due to the price of oil • Financial sector that has become strict in lending practices which have caused the volume to rejections for financing by banks to rise On the political scene last year, the government lacked stability due to disagreement and there were a total of 3 governments within a single year, causing policies to lack continuity and to halt, which affected the confidence of investors in Thailand and affected tourism, especially the closure of Suvarnaphumi Airport which caused a loss of tens of billions of Baht and which will have a continual affect on tourism in the year 2009. The economy in the first half of the year (1H) saw inflation rise greatly due to problems with high oil prices of up to 9.6 in July which is the highest in 10 years. Interest rates were higher in the first half of the year in order to maintain the level of inflation which indicated that there may be more non-performing loans (NPL’s) which in turn may cause the financial institutions to be more careful in lending money. Therefore, in order to stimulate the economy, the government issued measures to stimulate the real estate sector in order to support the economy in general. But since oil prices were fluctuating severely and the political situation was instable, the situation did not go in the direction desired. In the second part of the year, the subprime lending crisis in the United States affected the entire world including Thailand with clear affects on exports and tourism causing the consumer confidence index to be at 9.30 in December which is the lowest in 10 years. Consumers delayed their decisions to buy and financial institutions became more strict in lending practices which caused more applications to be rejected by the bank or on average approximately 20-30%. In any case, the Company prepared for this situation in advance by cooperating with financial institutions to manage the credit of customers from the date of entering into the purchase and sale contract which resulted in the Company obtaining a rejection ratio by the banks of only 10%. In terms of costs, oil reached record highs and in the first part of the year (1H) the price of oil was as high as 150 USD per barrel (Source: Nymex Crude Oil Future). The weak US dollar caused speculation on the price of oil and caused the price of oil to increase worldwide as well as a decision to cut production by OPEC. However, in the second part of the year (2H), when the global economy slowed down, the demand for oil and speculation decreased. The price of oil in the second half of the year (2H) decreased causing the price of construction materials to fluctuate. In the first half of the year (1H) the price of construction materials increased drastically with the price index for construction materials at 177 (in the year 2000=100) or an increase of 30% when compared to 2007 which was caused by the price of steel increasing strongly and reached their highest in July with the index at 309.90. In order to solve the problem of high costs, several developers purchased materials in advance, especially steel strips so that there wouldn’t be so much affect on projects that had been opened and could not adjust the sale price according to the cost. The fluctuation of cost in the middle of the year was one factor that caused the Company to decide to slow the opening of projects to see the direction of the cost more clearly. In the end of the year, due to decrease in the price of construction materials and the slowed global economy, the construction material index decreased to 140.30 which is close to the index last year. Competition within the Industry In 2008 approximately 70,000 units were unveiled, down from the previous year approximately 30%. Only 33,000 condominium units were sold, down 45% from 2007. In 2008, residential units that were unveiled decreased from the beginning of the year due to fears of oversupply from 2007 when approximately 60,000 Units were unveiled especially in the vicinity of the sky train e.g. Sukhumvit, Rachada and Ladprao. In some areas there was still lack of supply since other developers have not developed any projects. This fear has caused other real estate developers to open fewer condominiums or change to develop horizontal residences since development of residential condominiums are large scale projects with high investment. In general, the supply decreased from last year together with the uncertainty of the economy and politics, in the second part of the year residential condominiums decreased by 30% compared to the first part of last year. In any case, the ratio of residential condominiums were higher compared with other types of residences with a market share of 45%.

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Ratio of Growth of Residential Condominiums that are Newly Opened Unit 70,000 60,000 50,000 178% 40,000 30,000 20,000 51% 10,000 9,733 3,501 0 2006 2007 LPN Others LPN Growth Market Share (According to Condominium Openings) % 100% 80% 55% 60% 64% 40% 28% 20% 21% 8% 8% 9% 0% 6% 2006 2007 A+ (> 5 ) Million Baht

A (3 - 5 ) Million Baht

-45% -62% 3,744 2008

% 300% 250% 200% 150% 100% 50% 0% -50% -100%

Total Growth

73% 12% 11% 4% 2008 B (1 - 3 ) Million Baht

C (< 1 ) Million Baht

In relation to residential condominiums that opened in 2008, it was found that Grade B condominiums were the highest with 73%. Second was Grade A and Grade C condominiums. The fewest condominiums that opened were A+. Most of the condominiums that opened were along the sky train, both for projects that are opening presently and future projects. The locations where there were the most condominiums opened were Sukhumvit, Ratchada-Rama 9, Phaholyothin, Latphrao and Thonburi, equal to approximately 60% of all projects that opened. In general, the price of condominiums increased 10% from the previous year (2008) and the Company held an 11% market share.

28 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Statistics for Condominiums that opened between 2004-2008 Number of New Condominiums that Opened 2004 2005 2006 2007 2008 Bangkok Units 15,040* 17,438* 39,489 59,496 32,979 Metropolis Project N.A. N.A. 82 121 92 LPN Units 4,287 3,680 3,501 9,733 3,744 Project 7 4 4 6 4 Market Share 29% 21% 9% 16% 11% Remark: *Data for 2004-2005 from AREA Data for 2006-2008 from the Research and Development Department of L.P.N. Development Public Company Limited There were 26,124 condominium unit registrations in 2008. There were 1,250 grade A+ units registered or 5%, 2,092 grade A units registered or 8%, 14,518 grade B units registered or 55% and 8,264 grade C units registered or 32%. In general there was a growth of 61% and the Company grew 163% with the highest market share of approximately 31% or approximately 8,009 Units. Statistics for Residential Condominium Registration 2003-2008 Resident Condominium Registration 2003 2004 2005 2006 2007 2008 Bangkok Units 5,423 7,567 11,617 14,807 16,222 26,124 Metropolis Project 28 43 59 56 59 86 LPN Units 1,596 1,176 2,389 3,333 3,050 8,009 Project 5 5 4 4 3 6 Market Share 29% 16% 21% 23% 19% 31% Remark: Not including National Housing Project Growth Ratio for Residential Condominium Registrations Unit % 200 30,000 163% 103% 25,000 100 40% 61% 40% 10% 20,000 4% 0 54% -8% 27% 15,000 -6% -26% -100 10,000 5,000 0

1,596

2003

1,176

2004 LPN

2,389

2005 Others

3,333

2006 LPN Growth

3,050

2007

-200 8,009

-300

2008 Total Growth

In 2008 approximately 30,000 residential condominium units were sold, down from the previous year approximately 30%. But the Companyâ&#x20AC;&#x2122;s sale grew from the previous year with a total value of Baht 9 Billion coming from the main projects that opened in 2008, namely, Lumpini Ville Ramkhamhaeng 26, Lumpini Suite Rama 8, Lumpini Place Rama 8, Lumpini Place Rama 9-Ratchada and Lumpini Ville Bangkae. All condominiums were sold according to the target despite external factors that were hostile because the Company develops projects in locations where competitors are scarce. The Company is often a pioneer in new locations, with the latest being Lumpini Ville Bangkae which has received a good response and was sold out in 3 days. ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Summary of the Real Estate Business in 2008 In general, the real estate sector in 2008 slowed from 2007 because of negative factors, including political instability, which caused internal turmoil, and in the first half of the year (1H) there was an effect from high inflation due to increased oil prices causing the price of construction materials to rise as well. In addition, there was the subprime lending crisis in the USA which caused several large financial institutions to close and caused unemployment which had widespread and severe effects across the globe including Thailand. The direct effect that can be seen is the consumer index was lowest in 10 years. Based on several factors especially the fluctuation of costs, the Company decided to slow its projects in the last year and even in the second half of the year (2H) when inflation decreased and oil and construction materials prices went down but the economy was still in decline. On the whole, despite the real estate sector in 2008 slowing down and the reduction in the number of condominiums that opened, the ratio of condominiums that did open was stil higher than other types of residences and comprised 48% of the market with approximately 33,000 units from approximately 92 projects with prices in the range of Baht 1-3 Mil ion. The market for residential condominiums slowed in terms of opening new projects from 2008 due to fears about over supply in the market from 2007. This caused companies operating this business to open fewer condominiums or develop horizontal residences which caused supply in the market to decrease from last year by approximately 45%. Consumer demand slowed due to lack of confidence in the economy and political situation. But the Company was only slightly affected since the Companyâ&#x20AC;&#x2122;s target group of customers truly need residences in great number allowing the Companyâ&#x20AC;&#x2122;s income to grow from the last year. The number of applications for financing by banks was less than 10% which is low compared to the market average of approximately 20-30%, since the Company manages customers together with the financial institutions from the day that customers reserve the unit. In general the ownership registrations in Bangkok Metropolis in 2008 were not affected and the total transfers increased approximately 60% from the previous year. Trends for the Real Estate Sector for 2009 The real estate market in 2009 is expected to slow, due to negative economic and political factors both on the domestic and international areas. The most urgent problem that many fear is the subprime lending crisis that has spread into a global economic crisis and is having a widespread effect and Thailand is being affected in both exports and tourism and may cause unemployment. The price of oil is another factor that will affect costs in the real estate sector and in 2008 fluctuated severely. Oil prices are expected to continue to fluctuate in 2009 but should not be higher than at the end of 2008 due to unrest in the Middle East which is not as violent as last year. It is likely that banks wil continue to be strict in granting financing. However, interest wil continue to be low allowing consumers to make higher repayments. The Company has begun to expand its strategy that it started to use 2 years ago, establishing a credit management service for customers from the beginning to reduce problems of applications for credit being rejected by banks permanently. There are also measures by the government that are expected to give more buying power to the public to stimulate the economy either by increasing the amount of cash in hand and reducing costs for the public or measures to stimulate the real estate sector through tax by allowing for deductions for housing interest up to 100,000 Baht per year or a deduction from the principal of Baht 300,000 for first time house buyers who transfer ownership in 2008 as well as extension of the reduction of the government transfer fee, mortgage fee and specific business tax. Market Trends in 2009 In the beginning of 2009, new projects in the market in general will slow down because developers will wait for some clear indication of the economic and political situation and in the second part of the year the situation should be clearer both on the domestic and international stage and the government economic stimulus measures should start to become apparent and cause developers start to open new projects again, although there may not be a high number. But competition among real estate developers will be high since the situation has caused consumers to delay their decisions to buy. In addition to planning and adjusting in the face of the economic crisis, developers need to use marketing techniques and promotions to clear out stock in hand especially in locations with high competition such as locations near mass transit hubs and may include plans to expand development of projects to the provinces or overseas as well as expanding into other areas of business such as constructing houses, operating serviced apartments or hotels. The Company has plans in the first part of the year to open 3-4 projects due to readiness in all areas with adjustments being made to handle the economic crisis from the middle of last year and the Company has begun to adjust its direction for development of small projects so that the construction is faster and in order to take advantage of government measures in full and in order to reduce risk to the project itself. Based on the experience of the Company in 1997, the Company believes that despite the economic crisis demand for residences is stil high. Therefore, in 2009 the Company has set its direction to open projects in locations where the Company already has a target base with emphasis on development of condominiums in the middle to upper middle level. This target group is an important group for the Company and assisted the Company in getting through the economic crisis in 1997. Based on information provided by the Research and Development Department of the Company, it is expected that in 2009, there will be approximately 30,000-35,000 condominium units completed and registered which is an increase of approximately 35% which is a result of numerous condominiums that opened in 2007 even amidst the economic crisis. But the real estate sector is considered the engine of economic growth and looks bright. Customers that truly need residences will be the main purchasing group in 2009 and it is a good opportunity to buy a house in 2009. Based on the experience in developing residential condominiums and the ability to control costs and liquidity that the Company has prepared from the past years, the Company is an organization that has a strong foundation and has a good outlook for growth in the future.

30 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Risk Factors

The Company has evaluated the risk factors in its business on a continual basis and considers risk as one of the main factors in planning its strategy and business in each year, by following up and managing risk factors on a continual basis to coincide with the direction and policy that has been approved by the Board of Directors of the Company which is comprised of the following main steps, namely: - Identifying the risk This stage identifies the risk and the related cause which may vary in each period and predicts the new risks that may arise in the future based on the information both domestic and international. - Evaluation of the Risk This stage uses various appropriate methods to evaluate the risk which emphasizes the cooperation of the executives for efficiency and in order to cover all of the risk that may occur. All of the risks and the risk management must be approved by the Board of Directors. - Following Up and Managing Risks This stage involves following up and overseeing operations as approved by the Board of the Directors every trimester. If there is any new risk that was not expected there may be a need to review the risk management one more time or if the risk is likely to occur again and may severely affect the business, the business plan may be revised and proposed to the Board of Directors for approval such as in the past year with the crisis which led to high costs especially the prices of steel which increased to the highest level in the middle of the year and then decreased towards the end of the year which was caused by the oil crisis and the financial instability caused by the subprime crisis which spread all over the world and at present it has still not been solved and the direction and solution is not clear. Therefore the Company has decided to adjust the business plan pending the situation and to improve the efficiency of the operations and of the staff as well as internal management to manage the crisis that has occurred. In 2009 the Company has provided 4 methods of managing the risk which can be divided into 2 levels as follows: - Base Case Scenario meaning that the market demand for residential units still exists with the main target group being middle income earners with sufficient purchasing power, but who need confidence in the price, quality and reputation of the developer. In addition, financial institutions are in healthy financial shape but are strict in lending practices for project lending and for consumer loans. - Worst Case Scenario meaning that the countryâ&#x20AC;&#x2122;s economy is in crisis and financial institutions close like in 1997 causing confidence levels to decrease in the entire system. In such an environment, marketing is important to create sales and to realize income for the Company. The Company has created a business plan to manage the risk for both scenarios. Risk Management by the Company during the financial crisis can be divided into 4 areas as follows: 1. Financial Risk which is comprised of 3 parts, namely, liquidity management, management of surplus stock and debt to equity ratio. - Liquidity Management Capital for operating the business and developing projects by the Company mostly is derived from financial institutions. In the previous period the Company had liquidity of approximately Baht 100-200 Million at all times. Presently, there is a possibility that financial risk will increase so the Company increased liquidity to Baht 1 Billion at all times by drawing down its facility in full from the Companyâ&#x20AC;&#x2122;s financial institution which may cause the interest costs of the Company to be higher, but the Company is confident that the added liquidity will cause the Company to be able to operate its projects that are being developed to be completed despite problems with financial difficulties which may cause the project to slow or to cease altogether. - Management of Surplus Stock As of 2008, the Company had stock in surplus due to completed projects worth Baht 1.4 Billion which were waiting to be sold. The Company has a policy of managing surplus stock so that it is no more than 3 months old in order to convert such surplus stock into cash and add to the liquidity by using marketing and sales campaigns on a continual basis in relation to which the Company has allocated additional funds in order to stimulate the market on the whole. - Debt to Equity Ratio Following the financial crisis in 1997, the Board of Directors of the Company made a policy that the debt to equity ratio must not exceed 1:1 in order to reduce the risk from operating business. At the end of 2008 the Company had a debt to equity ratio of 1.97:1 which included debt that bore interest and debt without interest. In 2009, the Company will maintain the policy of having a 1:1 debt to equity ratio.

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2. Strategic Risk Despite the fact that residences are a main requirement of life, in hard economic times consumers are even more wary of making a decision to purchase a residence due to the high price and confidence is needed both for buyers and sellers. The price will be an important factor that consumers will consider. The policy that the Company is using is to develop residential condominiums for those with middle incomes to low upper incomes by selling units prior to construction which is risky for the Company. Therefore, the Company has planned to manage the strategic risk as follows: - Develop projects on a continual basis in locations where the Company has a customer base using the Companyâ&#x20AC;&#x2122;s advantages which are both information on the demand for residences and regarding price together with the confidence that consumers have in the Company from development of projects in the past. - Ensure that the size of the projects are appropriate in each location and each period to ensure that the risk from surplus is minimized use the appropriate price strategy for the market and consumption power so that units can be sold as well as reducing costs especially indirect costs, which is the forte of the Company and review the ratio of initial profit so that it is appropriate for the present period. 3. Business Environnent Risk Since the development of residential condominiums is a large scale development and take a long time to complete and are usually constructed in densely populated areas, it is hard to avoid effecting the surrounding community especially when modern society places great importance on rights and equality. Therefore, the Company has improved its operation methods as follows: - Special care is taken in acquiring new land in order to assess the risk and affects on the surrounding community. - Provide a team of personnel that is comprised of high level executives to host public relations activities with the surrounding neighborhood. 4. Operational Risk In present conditions with the economy in decline it is important to operate efficiently on a continual basis, whether in terms of management of sales and marketing, construction management and community management. If any of these 3 principals is lacking in efficiency, the Companyâ&#x20AC;&#x2122;s business may not succeed according to the business plan that was formulated. Therefore, the Company has increased its role and it intensity in the first 2 main parts as follows: - Sales and Marketing Management Maintaining the marketing costs to stimulate the decision to purchase by providing marketing costs of 1% of the gross income of the Company. From the initial estimates of the business plan, the Company has a goal to achieve sales of approximately Baht 10 Billion which is equal to Baht 100 Million in marketing costs. In any case, the Company will continue to consider a balance in this situation that may change at all times and is always ready to adjust its plan. - Construction Management In 2009 the Company instructed the construction management department to increase the intensity in its management in 2 important areas, namely, cost management and management of the construction period by issuing the following policy for projects under construction as follows, namely by reducing the costs of construction especially indirect costs by at least 1% and adjusting the completion date of the projects to be 30 days earlier. Both of these have been included in the operating plans and can be inspected at all times. Based on the said plan, all of the parties involved will be encouraged to change their operating methods and use new operating methods which will allow for sustainable growth and immunity in the long run. - Community Management The responsibility to the purchasers of each project that the Company develops after transfer of ownership is one of the strategic policies that is important to the Company. The Company has a goal of providing a quality life to the community that the Company has developed and this is a strong point that creates confidence for customers with the Company. During the economic crisis the Company has increased its intensity in all aspects of its role and strategy especially in community management and in security issues. In addition, the Company has provided for all parties to improve internal processes (re-process) and management of communications systems inside and outside the organization as well as preparing to handle the economic crisis that could worsen and affect the business on the whole.

32 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Summary of the Performance in 2008 and Trends in 2009

From the establishment of the Company until today, the Company’s 20th year of operations, the Company has always considered the balance of operations in all aspects under the philosophy of sufficiency economy and good corporate governance which has allowed the Company to grow on a continual basis, with financial stability, gaining universal recognition. This can be seen from the previous year when the Company was chosen by Forbes Asia as one of the most solid performing companies with income under US$ 1 Billion based on its operations that have grown on a continual basis and is 1 out of 7 Thai companies that was selected. The company also received an award from the Consumer Protection Board, Office of the Prime Minister (CPB) as the “Best Real Estate Developer 2007-2008” which is a project established by the CPB to encourage companies to operate with good ethics and with responsibility towards society. This reflects the importance given to customers both before and after sales, especially managing the community, which is an after sales service that is important and is one of the strengths and differences from its competitors which can lead to stable growth. The year 2008 was also ranked by the Institute of Thai Directors as a company with very good governance (4 stars) for the 5th consecutive year for operating according to good governance principals that focuses on disclosure of information to investors, shareholders and the public with transparency at all times.

In 2008, which was the 3rd period of the Company’s vision, with the first period between 2003-2004, the Company developed its potential and efficiency to be a market leader in developing condominiums. The second period between 2005-2007 the Company focused on maintaining efficiency of operations as a leader of developing condominiums and the Company was widely accepted as a market leader in condominiums. The third period between 2008-2010, the Board of Directors of the Company set the vision of the Company to focus on quality in all aspects of operations for stable growth while also being responsible for the environment and for society in all aspects of the Company’s business under the “Blue Ocean Strategy” in developing and expanding projects. This has allowed the Company to stay above its competitors and be the leader in the condominium market with more than 20 years of experience in the real estate development business, especially during the 1997 financial crisis, which taught the organization’s staff to have the same customs and motivations for the organization to beat the economic crisis and grow in leaps and bounds. Today this custom has been developed into a core value or “C-L-A-S-S-I-C” which is the method of developing and shaping the staff at all levels both new and old to perform in a way which will take the organization to sustainable growth in the face of competition that is becoming ever more fierce and unstable all the time. The operations of the Company in 2009 in the first part of the year the Company operated according to its plan and reached its goals under the crisis situation especially in terms of cost, which is a direct affect of the price of steel that is more than double in price compared to the beginning of last year up to mid year which was caused by the fluctuation of oil prices which were at record highs. In the beginning of

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

33


the year 3 condominium projects opened, namely Lumpini Vil e Ramkhamhaeng 26, Lumpini Place and Lumpini Suite Rama 8 and Lumpini Place Rama 9Ratchada. All of these projects received a good response in terms of sales and the first 2 projects are under construction and wil be ready for transfer and realization of infome in 2009. Lumpini Place Rama 9-Ratchada wil be complete in 2010. Three projects wil be completed in the first half of this year namely, Lumpini Place Ratchada-Thapra, Lumpini Vil e Ramkhamhaeng 44 and Lumpini CondoTown Bodindecha-Ramkhamhaeng, which is a large project with almost 3,500 units in 14 buildings, and is the first project under the brand “Lumpini CondoTown” which the Company wil designate as its flag ship to pioneer and develop condominiums in new locations focusing on customers with income in the upper low level (15,000-20,000 Baht/family/month). The said project has created new things in various areas starting from managing sales to more than 100,000 customers when sales were launched as well as developing the product and managing the construction which involved new management procedures to obtain construction costs that are appropriate for the sale price, and the construction period that had to be completed within 1 year in an area of almost 140,000 square meters. The project also required large community management to manage the quality of living to be high for the residents under the “Lumpini” standard as well as new financing ideas from the close cooperation of financial institutions for the benefit of all parties involved as shown in detail in the background of the Company on page 5. All projects wil be completed and transferred to customers on time. In the second part of the year, the Company decided to slow development of new projects due to the cost fluctuation as explained above to wait and see how the situation improves in terns of business risk and the Company opened a new project in December 2008 once the situation regarding costs and oil prices became more stable despite the political crisis and consumer confidence index being low. The Company adjusted its strategy in developing projects, especially pilot projects to be appropriate with the present conditions, by developing small projects with just enough units at attractive prices in order to stimulate the market in that area to be aware and to become interested which leads to a decision to purchase. This project received a good response from consumers according to the strategy planned and the Company was able to sell all of the units on the first day. This shows that consumers are confident in the brand “Lumpini”, especial y in the projects completed in the second half of the year, namely Lumpini CondoTown Ramindra-Laksi which is a project under the brand “Lumpini CondoTown” which was a high success for the Company again and was sold out on the first day as well.

34 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

In terms of market share, the Company held a market share in 2008 of approximately 31% for condominiums that were registered in Bangkok Metropolis. In 2008 there were approximately 26,100 condominium units registered in Bangkok Metropolis from 86 projects. The Company registered a total of approximately 8,000 condominium units from 6 projects in 2008. The Company unveiled a total of 4 projects with a total of 3,750 units or 11% of the total condominium units unveiled in Bangkok Metropolis last year. The Company and its subsidiaries had an operational performance with a total combined income of Baht 7.23236 Billion an increase from 2007 when income was only Baht 6.754 Billion or an increase of 7.08% coming from the Company’s ability to realize income from 5 projects that were completed in 2008 and continuing projects from 2007, with initial profit from sales at 31.24%. The net profit ratio was at 16.67% which is an increase from 2007 of 13.74%. This shows that the Company has been able to maintain growth on a continual basis despite the economic crisis together with negative factors, due to the Company’s care in doing business and a balance and selection of the right strategy.

LPN 31%

MARKET SHARE


Cash flow as at 31th December 2008 the Company had cash and temporary investment capital of Baht 1.69075 Billion, an increase from the same period last year in which the amount was only Baht 454.82 Million or an increase of 273.06%. This cash flow came from operations and reserves of cash drawn down from a facility for construction in full from financial institutions for sufficient liquidity for operating the various projects that are under development. Despite the financial crisis which caused the financial institutions to delay or halt financing projects, under the Companyâ&#x20AC;&#x2122;s risk management plan (worst case scenario) that the Company assessed and formed a plan to deal with this risk, the Company has a ratio of debt to shareholder equity increased from 0.88:1 to 0.97:1 and has interest bearing debt to shareholders equity increased from 0.45:1 to 0.58:1 respectively in 2007 and 2008. On October 9, 2009, the Board of Directors of the Company passed a resolution to repurchase shares since the price of the shares was lower than basic factors of the Company with a budget for the repurchase of Baht 200 Million to repurchase approximately 62 Million shares equal to 4.20% of the shares that had been sold out of a total of 1,475,698,768 shares. The repurchase will be solely from the Stock Exchange of Thailand between 24th October 2008 to 23rd April 2009 and on 15th January 2009 the Company repurchased a total of 8,146,300 shares at a total value of Baht 17,841,189 or 0.552% of the shares that have been paid up at an average price of 2.19 Baht per share.

In order to support the economic slowdown, the Company has decided maintain the same number of staff from the middle of 2008 focusing on internal reorganization to obtain maximum efficiency in order to support the Companyâ&#x20AC;&#x2122;s growth in 2009 which is a direct way of controlling costs of the Company. This policy has made everyone reconsider the business plan. Any adjustment will lead to a new way of thinking and new way of operating which will allow the Company to grow in the future like after the economic crisis in 1997. The Company will also alter its role of the Company and its subsidiaries to coincide with the current situation, by joining the financial management with the income department for convenience of management. Construction management will be provided by Lumpini Project Management Services Co., Ltd. Sales management, community management and leased assets will be managed by Pornsanti Co., Ltd.

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

35


The Company has also been responsible for the environment and society on a continual basis. In the past year the Company engaged in activities that covered all areas such as donating blood, activities for underprivileged children, building houses for homeless children and increasing the green area in the projects that the Company is developing or in the surrounding community as well as separating garbage, campaigning to turn off the lights for 1 hour to reduce energy consumption and campaigning against use of plastic bags. All of these activities focus on starting within the organization and expanding to the community that the Company is developing and then expanding it to the surrounding community which can be considered as creating a good environment and quality community under the slogan “Vibrant Community” which indicates a good quality of life of residents. This is the difference between the Company and its competitors that helps create awareness and memory of the products and has a marketing affect through words of mouth, introduction by friends or acquaintances. This allows the Company to save costs for direct marketing to be low which the Company is always increasing especial y to create quality of life for residents. In 2009 with the economic crisis and high risk especial y in regard to the political situation and the affect from financial problems caused by the subprime crisis, financial institutions are more strict in lending for projects and for personal consumption. The Company has set a plan for operating in this economic difficulty as well as risk management, details of which appear in the section “Risk Management”. In 2009 the Board of Directors of the Company have set a target for growth at 10-15% and expect that in 2009 the Company wil have income from sales of approximately Baht 8 Bil ion from 6 projects that are completed, namely, Lumpini Vil e Ramindra-Laksi, Lumpini Vil e Prachachun-Phongphet, Lumpini Suite Pinklao, Lumpini CondoTown Ratanatibet, Lumpini Vil e Ramkhamhaeng 26 and lastly Lumpini Place and Lumpini Suite Rama 8. At the end of 2008 the said projects realized income of approximately Baht 7 Bil ion and the Company has a target to get rid of all surplus stock in 2008 worth approximately Baht 1.4 Bil ion and convert it into cash to add to the liquidity in the fist half of the year 2009 and ensure that the length of new surplus products is not more than 3 months by increasing marketing activities and expenses on a continual basis. In regard to the fear of many people that the financial institutions are rejecting applications for loans, the Company has set up a division to take responsibility of managing the credit of customers directly from the day the customer decides to reserve the unit and cooperate with the financial institution closely so that there are the

36 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

same number of rejections as last year or lower. In 2008 only approximately 10% of customers of the Company had their applications for loans rejected which is lower than the market average. The company plans to open 6-8 new projects worth Baht 12 Bil ion with targets for income set at Baht 10 Bil ion in order to realize the income in 2010 and 2011. The company is currently in the process of negotiating to purchase 2-3 plots of land to open projects in the first half of the year. The Company believes that the business of building quality residences in the city is one of the basic needs of living and the target group of customers of the Company truly need residences, all under the assumption of balance in all areas with case and under the management of risk which is provided for under the business plan, based on information both domestic and international. This is coupled with experience in getting through economic crisis and management that considers responsibility to the environment and society and equality of the stakeholders through disclosure, transparency and accountability. This wil help the Company to carry on business and grow constantly despite the economic downturn. Additionally, the business and development of projects by the Company is helping the country to have work which in turn helps stimulate the country’s economy on the whole.


Income from Sales (MB)

8,000 6,574

6,000

0

7,019

4,748

4,000 2,000

G/P from Sales (MB)

2,309 2004

2,250 750

2006

2007

2008

0

810

1,187

2004

2005

Net Profit (MB)

1,300 650 325 0

765 448

2004

2.325

928

2005

2006

2007

2008

2.12

2.20

2.24

2004

2005

2006

2.59

3.04

0

4,524

5,970

7,176

2,500 1,250

2006

2008

5,000 3,750

2,250 2005

2007

Liability (MB) 8,846

2004

2008

0.775

6,750

0

2007

1.550

588

9,000 4,415

2006

3.100

Asset (MB)

4,500

2,193

Book Value (B) 1,205

975

2,279 1,534

1,500

3,346 2005

3,000

2007

2008

0

2,091

2004

2,657

3,349

4,362

1,532 2005

2006

2007

2008

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

37


Structure of Revenue from Business

Income structure of revenue from businesses in which the Company holds at least a 20% of shares For the each year ended December 31, 2008, 2007, and 2006 2008 2007 2006 Operated by Products & Services % of Company Shareholding Revenue % Revenue % Revenue % - 7,143.60 97.81 6,650.43 97.46 4,846.29 96.53 L.P.N. Development Public Company Limited Property Development Pornsanti Company Limited Property Development 99.99 15.21 0.21 47.91 0.70 5.34 0.11 Lumpini Property Management Company Limited Administration & Services 99.88 141.84 1.94 125.43 1.84 138.21 2.75 Lumpini Project Management Services Administration & Services 99.93 3.04 0.04 - - - - Company Limited Grand Unity Development Company Limited Property Development 33.33, 20.00* - - - - 30.65 0.61 Total 7,303.69 100.00 6,823.77 100.00 5,020.49 100.00 *The Company sold some the shares on 1st October 2007 and still has the investment proportion of 20%

38 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Corporate Information

Company: Type of Business : Address: Company Registration No.: Telephone: Fax: Call Center: Website:

L.P.N. Development Public Company Limited Real Estate Development 1168/109 Lumpini Tower, 36th Floor, Rama 4 Road Thungmahamek, Sathorn, Bangkok 10120 0107537002303 02-285-5011-6 02-679-8699 02-800-9009 www.lpn.co.th, www.bestbuycondo.com

Aff iliate: Affiliate’s Off ice:

1. Lumpini Property Management Co., Ltd. 2. Lumpini Project Management Services Co., Ltd. 3. Pornsanti Co., Ltd. 1168/109 Lumpini Tower, 36th Floor, Rama 4 Road, Thungmahamek, Sathorn, Bangkok 10120

Affiliate Company: Address:

Grand Unity Development Co., Ltd. 888/224 Mahathun Plaza, 2nd Floor, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330

Legal Counselor: Telephone: Fax:

Sermsak Vecha & Associates Law Off ice Chokechai Ruammitr Condominium Building, 12th Floor, 399/365-368 Soi Chokechai Ruammitr, Ladyao, Chatujak, Bangkok 10900 02-691-5541-5 02-691-5541-5

Auditor: Telephone: Fax:

Mrs. Suvimol Krittayakiern Certif if ied Public Accountant No. 2982 DIA International Auditing 316/32 Soi Sukhumvit 22, Sukhumvit Road, Klongtoey, Bangkok 10110 02-259-5300 02-260-1553

Registrar: Telephone: Fax:

Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, 4th, 6th-7th Floor, Ratchadapisek Road, Klongtoey, Bangkok 10110 02-229-2800, 02-654-5599 02-359-1262-3

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

39


Management Team

Board of Directors Independent Directors Mr. Pakorn Thavisin

Executive Directors

Chairman and Independent Director

Mr. Tikhamporn Plengsrisuk

Chief Executive Officer and Executive Chairman Professor Siri Keiwalinsrit

Mr. Tawechai Chitasaranachai

Vice Chairman and Independent Director Vice Chairman and Independent Director

Mr. Pichet Supakijjanusan

Executive Director

Mrs. Yupa Techakraisri

Executive Director

Mr. Kumpee Chongthurakit

Executive Director

Mr. Opas Sripayak Mr. Amornsuk Noparumpa

Mr. Thep Roongtanapirom

Mr. Weerasak Wahawisal

Mr. Vudhiphol Suriyabhivadh

Managing Director

Director and Independent Director Director and Independent Director Director and Independent Director Director and Independent Director Directors

The Audit Committee Mr. Amornsuk Noparumpa Mr. Tirachai Panchasarp

Director

Mrs. Jongjit Thapanangkun

Director

Mr. Tikhamporn Plengsrisuk

Director

Chairman of Audit Committee

Mr. Thep Roongtanapirom

Audit Committee

Mr. Weerasak Wahawisal

Audit Committee

Mr. Pichet Supakijjanusan

Director

Mrs. Yupa Techakraisri

40 Annual Report 2008 L.P.N. Development Public Company Limited

Director

Mr. Kumpee Chongthurakit

Director

Mr. Opas Sripayak

Director

Annual Report 2008 L.P.N. Development Public Company Limited 41


Management Team

Board of Directors Independent Directors Mr. Pakorn Thavisin

Executive Directors

Chairman and Independent Director

Mr. Tikhamporn Plengsrisuk

Chief Executive Officer and Executive Chairman Professor Siri Keiwalinsrit

Mr. Tawechai Chitasaranachai

Vice Chairman and Independent Director Vice Chairman and Independent Director

Mr. Pichet Supakijjanusan

Executive Director

Mrs. Yupa Techakraisri

Executive Director

Mr. Kumpee Chongthurakit

Executive Director

Mr. Opas Sripayak Mr. Amornsuk Noparumpa

Mr. Thep Roongtanapirom

Mr. Weerasak Wahawisal

Mr. Vudhiphol Suriyabhivadh

Managing Director

Director and Independent Director Director and Independent Director Director and Independent Director Director and Independent Director Directors

The Audit Committee Mr. Amornsuk Noparumpa Mr. Tirachai Panchasarp

Director

Mrs. Jongjit Thapanangkun

Director

Mr. Tikhamporn Plengsrisuk

Director

Chairman of Audit Committee

Mr. Thep Roongtanapirom

Audit Committee

Mr. Weerasak Wahawisal

Audit Committee

Mr. Pichet Supakijjanusan

Director

Mrs. Yupa Techakraisri

40 Annual Report 2008 L.P.N. Development Public Company Limited

Director

Mr. Kumpee Chongthurakit

Director

Mr. Opas Sripayak

Director

Annual Report 2008 L.P.N. Development Public Company Limited 41


Abridged details of Board of Directors and the Management st of Company as at 31 December 2008

Mr. Pakorn Thavisin Age 70 Years Position Chairman of the Board of Directors and Independent Director Educational Background Qualifications/Faculty - The Chartered Institute of Bankers, London - Diploma from National Defence College (Class 311) - Certification of Completion of Directors Certification Program (DCP 0/2000), Thai Institute of Directors Association (IOD) - Certification of Attendance of Role of the Chairman Program (RCP 16/2007), Thai Institute of Directors Association (IOD) Shareholding Ratio - Working Experience for past 5 years Present - Chairman: Colgate-Palmolive (Thailand) Co., Ltd. - Chairman of Audit Committee and Independent Director: Royal Orchid Hotel Public Company Limited 2004 - 2008 - Director: Bank of Ayudhya Public Company Limited Prof. Siri Keiwalinsrit Age 79 Years Position Vice Chairman and Independent Director Educational Background Qualifications/Faculty - LL.B., Thammasat University - Barrister-at-Law, Council of Legal Education Thailand - Diploma from National Defense College (Class 25) - Honorary Doctorate Degree of Law, Chulalongkorn University - Training course on development in faculty of Land possession and administration works, Cambridge University, England - Audit Committee Program, Thai Institute of Directors Association (IOD)(ACP 7/2005) - Director Accreditation Program (DAP 25/2004) - Finance for Non-Finance Directors, Thai Institute of Directors Association (IOD) Shareholding Ratio - Working Experience last 5 years Present - Law Drafting Committee, Ministry of Labour and Social Welfare - Law Drafting Committee; Group No.7, Office of Juridical Council - Advisor of Graduated Committee : Faculty of Law, Thammasat University - Senior Committee of National Land Management Committee, Ministry of Natural Resources and Environment - Advisor of Safety and Health at work Promotion Association Committee : Safety and Health at Work Promotion Association (Thailand) - Advisor of Asset Assessment Committee: Asset Assessment Association - Legal Counselor of the Law Consideration Committee : Land Department - Advisory Committee of Law Improvement and Development : Land Department Mr. Tawechai Chitasaranachai Age 70 Years Position Vice Chairman and Independent Director Educational Background Qualifications/Faculty - Bachelor Degree in Engineering, Chemical Engineering, Tienjin University, Tienjin, China - Director Accreditation Program (DAP 26/2004) Shareholding Ratio - Working Experience last 5 years 1982 - Present - Director : Orathai International Co., Ltd. 1994-2005 - Director : Pornsanti Co., Ltd. 1994-2005 - Director : Lumpini Property Management Co., Ltd. 1975-2004 - Managing Director : Vela Co., Ltd.

42 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Mr. Amornsuk Noparumpa Age 63 Years Position Chairman of Audit Committee and Independent Director Educational Background Qualifications/Faculty - Barrister-at-Law, Council of Legal Education Thailand - Barrister-at-Law, Lincolnâ&#x20AC;&#x2122;s Inn, London - Diploma from National Defense College (Class 399) - Certification of Completion of Directors Certification Program (DCP 30/2003), Thai Institute of Directors Association (IOD) - Curriculum in Security Psychology Class 31 - Curriculum in Advanced Management Class 7 - Audit Committee Program Class 23/2008 Shareholding Ratio 0.07% Working Experience last 5 years Present - Senior Advisor : Bank of Ayudhya Public Company Limited - Chairman : Ayudhaya Securities Public Company Limited - Director, Audit Committee and Selection Committee for Compensation and Development of Personnel and Chief of Good Governance: Thai Airways Public Company Limited - Audit Committee and Chairman of Nomination and Remuneration Committee : RCL Public Company Limited - Chairman : Siam Realty & Services Co., Ltd. 2007 - Senior Legal Advisor : Bank of Ayudhya Public Company Limited - Senior Executive Vice President : Bank of Ayudhya Public Company Limited 2003-2004 - Executive Director, First Executive Vice President and Legal Advisor : Bank of Ayudhya Public Company Limited Mr. Thep Roongtanapirom Age 63 Years Position Audit Committee and Independent Director Educational Background Qualifications/Faculty - Master Degree in Business Administration, Finance and Accounting, Columbia University, USA - Bachelor Degree in Commerce (Honour), Thammasat University - Bachelor Degree in Accounting (Honour), Thammasat University - Certification of Completion of Directors Certification Program (DCP 20/2002), Thai Institute of Directors Association (IOD) - Audit Committee Program 8/2005, Thai Institute of Directors Association (IOD) Shareholding Ratio 0.03% Working Experience last 5 years Present - Director : Sun Wood Industries Public Company Limited - Advisor : Thai Investors Association - Director : Family Know How Co., Ltd. - Director : Sun Paratech Public Company Limited Mr. Weerasuk Wahawisal Age 53 Years Position Audit Committee and Independent Director Educational Background Qualifications/Faculty - Master of Accounting Sciences, University of Illinois, U.S.A. - Master of Business Administration, Ohio University, U.S.A. - Bachelor of Business Administration (2nd Class Honour) , Thammasat University

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

43


Shareholding Ratio - Working Experience last 5 years Present - Vice President of Accounting Department : RCL Public Company Limited - SVP Credit & Risk Management: Hutchison CAT Wireless Multimedia Head of Finance Support: TA Orange Co.Ltd. Mr. Vudhipol Suriyabhivadh Age 64 Years Position Director and Independent Director Educational Background Qualifications/Faculty - Bachelor Degree in Accountancy, University of New South Wales, Australia - LL.B., Sukhothai Thammathirat University - Diploma, Management Course, IMEDE Management Development Institute, Lausanne, Switzerland - Certification of Completion of Directors Certification Program (DCP 36/2003), Thai Institute of Directors Association (IOD) - Audit Committee Program, (ACP 7/2005) Thai Institute of Directors Association (IOD) Shareholding Ratio 0.02% Working Experience last 5 years Present - Independent Director and Chairman of Audit Committee : Thai Agri Foods Public Company Limited - Independent Director, Audit Committee and Remuneration Committee : Thai Wah Food Products Public Company Limited - Advisor : Thai Listed Companies Association - Independent Director and Chairman of Audit and Risk Committee : Laguna Resort and Hotel Public Company Limited - Independent Director and Chairman of Audit Committee: Bangkok Ranch Public Company Limited Mr. Tirachai Panchasarp Age 70 Years Position Director Educational Background Qualifications/Faculty - Secondary School, Darasamutr School, Chonburi Shareholding Ratio 0.09% Working Experience last 5 years 1990-2005 - Director : Pornsanti Co., Ltd. Mrs. Jongjit Thapanangkun* Age 62 Years Position Director Educational Background Qualifications/Faculty - Master Degree, Faculty of Economics, Ramkhamhaeng University - Certificate English of Proficiency, AUA Language Institute - Diamond Grading Gemological Institute of America - Bachelor Degree, Faculty of Economics, Ramkhamhaeng University - Director Accreditation Program (DAP 4/2003) - Finance for Non-Finance Directors (FND 14/2004) Thai Institute of Directors Association (IOD) Shareholding Ratio 0.27% Working Experience last 5 years Present - Director : Burapa Golf and Country Club Co., Ltd. * Mrs. Jongjit Thapanangkun, Mrs. Yupa Techakraisri and Mr. Kumpee Chongthurakit are of the same family.

44 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Mr. Tikhamporn Plengsrisuk Age 59 Years Position - Chief Executive Officer and Executive Chairman and Director Educational Background Qualifications/Faculty - Bachelor Degree in Engineering, Chulalongkorn University - Common engineer registration No.Sor.Yor.140 from Office of the Board for control of the engineering Professional - Certification of Completion of Directors Certification Program (DCP 23/2002), Thai Institute of Directors Association (IOD) Shareholding Ratio 0.68% Working Experience last 5 years Present - Director : Pornsanti Co., Ltd. - Director : Lumpini Property Management Co., Ltd. - Director : Lumpini Project Management Services Co., Ltd. Mrs. Yupa Techakraisri* Age 59 Years Position Executive Director and Director Educational Background Qualifications/Faculty - Bachelor Degree in Economics, Ramkhamhaeng University - High Diploma in Advanced Accounting of Pitman Examination Institute - Certification of Completion of Directors Certification Program (DCP 32/2003), Thai Institute of Directors Association (IOD) Shareholding Ratio 1.76% Working Experience last 5 years Present - Director : Pornsanti Co., Ltd. - Director : Lumpini Property Management Co., Ltd. - Director : Lumpini Project Management Services Co., Ltd. - Executive Director : Sri Sam Ang Supplier Co., Ltd. - Executive Director : T. Krungthai Industries Public Company Limited - Director : Grand Unity Development Co., Ltd. Mr. Pichet Supakijjanusan Age 58 Years Position Executive Director and Director Educational Background Qualifications/Faculty - Bachelor Degree in Architecture, Chulalongkorn University - Chartered Architect No. Sor.Thor. 348, Council of Architects - Certification of Completion of Directors Certification Program (DCP 27/2003), Thai Institute of Directors Association (IOD) - Finance for Non-Finance Directors (FND 14/2004) - Audit Committee Program (ACT 21/2007), Thai Institute of Directors Association (IOD) - Director Accreditation Program (DAP 26/2004), Thai Institute of Directors Association (IOD) Shareholding Ratio 0.54% Working Experience last 5 years Present - Director : Pornsanti Co., Ltd. - Director : Lumpini Project Management Services Co., Ltd. - Director : Lumpini Property Management Co., Ltd. - Audit Committee and Independent Director : Merchant Partner Securities Public Company Limited 2001-2003 - Managing Director : Grand Unity Development Co., Ltd. * Mrs. Jongjit Thapanangkun, Mrs. Yupa Techakraisri and Mr. Kumpee Chongthurakit are of the same family. Mr. Kumpee Chongthurakij* Age 53 Years ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

45


Position Executive Director and Director Educational Background Qualifications/Faculty - Bachelor Degree in Business Administration, Assumption University - Certification of Completion of Directors Certification Program (DCP 48/2004), Thai Institute of Directors Association (IOD) Shareholding Ratio 1.29% Working Experience last 5 years Present - Honorary Chairman of Shoe Industrial Group : Federation of Thai Industries - Director : Pornsanti Co., Ltd. - Director : Lumpini Property Management Co., Ltd. - Director : T. Krungthai Industries Public Company Limited - Director : S.S.A. Industry Co., Ltd. - Director : Sri Sam Ang Supplier Co., Ltd. - Director : Lumpini Project Management Services Co., Ltd. Mr. Opas Sripayak Age 46 Years Position Managing Director, Executive Director and Director Educational Background Qualifications/Faculty - Bachelor in Architecture, Silpakorn University - Mini M.B.A., Thammasat University - Certification of Completion of Directors Certification Program (DCP 71/2006), Thai Institute of Directors Association (IOD) Shareholding Ratio - Working Experience last 5 years 2005 - Assistant Managing Director : Lumpini Property Management Co., Ltd. 2001-2003 - Research and Development Manager : Lumpini Property Management Co., Ltd. Miss Somsri Techakraisri Age 47 Years Position Deputy Managing Director Educational Background Qualifications/Faculty - LL.B., Thammasat University - Mini M.B.A., Thammasat University - Certification of Completion of Directors Certification Program (DCP 70/2006), Thai Institute of Directors Association (IOD) Shareholding Ratio - Working Experience last 5 years Present - Managing Director : Pornsanti Co., Ltd. 2006-2007 - Deputy Managing Director : Lumpini Property Management Co., Ltd. 2004-2006 - Assistant Managing Director : L.P.N. Development Public Company Limited 2003-2004 - Senior Manager, Office of Directors: L.P.N. Development Public Company Limited 1997-2003 - Manager, Office of Directors: L.P.N. Development Public Company Limited * Mrs. Jongjit Thapanangkun, Mrs. Yupa Techakraisri and Mr. Kumpee Chongthurakit are of the same family. Mr. Sombat Kittipokiratana Age 47 Years

46 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Position Assistant Managing Director Educational Background Qualifications/Faculty - Master Degree in Business Administration, University of Thai Chamber of Commerce Shareholding Ratio - Working Experience last 5 years 1999-1993 - Director and Specialist on Stock Exchange of Thailand : Tantawan Industry Public Company Limited Miss Suporn Wongvaipairoj Age 43 Years Position Accounting Manager Educational Background Qualifications/Faculty - Master Deqree in Accounting, Siam University Shareholding Ratio - Working Experience last 5 years 2001-Present - Accounting Manager : L.P.N. Development Public Company Limited Mrs. Rungthip Piyaterawong Age 41 Years Position Finance Manager Educational Background Qualifications/Faculty - Master Deqree in Business Administration, Chulalongkorn University Shareholding Ratio - Working Experience last 5 years Present - Finance Manager : L.P.N. Development Public Company Limited Miss Paveerisa Wasitrakul Age 52 Years Position Internal Audit Manager Educational Background Qualifications/Faculty - Bachelor Degree in Business Administration, Assumption Business Administration College - Mini M.B.A., Thammasat University Shareholding Ratio - Working Experience last 5 years 2001-Present - Internal Audit Manager : L.P.N. Development Public Company Limited * Mrs. Jongjit Thapanangkun, Mrs. Yupa Techakraisri and Mr. Kumpee Chongthurakit are of the same family.

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

47


Investment Structure

The investment structure of L.P.N. Development Public Company Limited in the other companies in which the Company holds over 10% of the shares as of December 2008

L.P.N. Development Public Company Limited Real Estate Development Registration Date: June 21, 1989 Type of shares: Ordinary Number of shares: 1,475,698,768 shares Paid-up shares 1,475,698,768 shares Par value: Baht 1.00 Registered Capital: Baht 1,475,698,768

Lumpini Project Management Services Co., Ltd. Project Management Service Registration Date: December 11, 2007 Type of shares: Ordinary Number of shares: 10,000 shares Par value: Baht 100.00 Registered Capital: Baht 1.00 Million Investment Proportion : 99.93%

Lumpini Property Management Co., Ltd. Community Service Registration Date: April 2, 1992 Type of shares: Ordinary Number of shares: 10,000 shares Par value: Baht 100.00 Registered Capital: Baht 1.00 Million Investment Proportion 99.88% Subsidiary Company

48 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Pornsanti Co., Ltd. Real Estate Development Registration Date: November 14, 1990 Type of shares: Ordinary Number of shares: 350,000 shares Par value: Baht 1,000.00 Registered Capital: Baht 350.00 Million Investment Proportion 99.99%

Grand Unity Development Co., Ltd. Real Estate Development Registration Date: September 7, 2001 Type of shares: Ordinary Number of shares: 5,000,000 shares Par value: Baht 10.00 Registered Capital: Baht 50.00 Million Investment Proportion: 20% Joint Venture Company

Remarks - L.P.N. Development Public Company Limited is engaged in real estate development with emphasis on residential condominiums. - Pornsanti Co., Ltd. is a subsidiary company engaged in the real estate development business of types other than residential condominiums. - Lumpini Property Management Co., Ltd. is a subsidiary engaged in condominium management services. - Lumpini Project Management Services Co.,Ltd. is a subsidiary engaged in the consultation business, engineering management business, marketing, sales and all types of construction. - Grand Unity Development Co., Ltd. is a joint venture company engaged in condominium and townhouse development focusing on development of projects that have slowed construction due to the economic crisis.

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

49


Corporate Organization Chart

Audit Committee

Lumpini Project Management Services Co., Ltd.

Managing Director

Internal Audit

Deputy Managing Director

Corporate Revenues & Finance Division Business Development Division

50 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

Sales Management Division

Project Management Division Customer & Brand Management Division


Board of Directors Nomination & Remuneration Committee Executive Committee

L.P.N. Development PCL.

Lumpini Property Management Co.,Ltd.

Managing Director

Managing Director

Deputy Managing Director

Deputy Managing Director

Community Management Division Human Resources Office

Preventive & Maintenance Management Division

Corporate Administration Division

Asset Management Division

Community Management Support Division

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

51


Shareholding Structure

Shareholders The first ten shareholders holding the highest number of shares of L.P.N. Development Public Company Limited, together with the number of shares held and the shareholding ratio as of the close of the shareholders registry book on 30th January, 2009 is as follows:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Major Shareholders

Number of Shares

Ratio (%)

Thai NVDR Co., Ltd. SOMERS (U.K.) LIMITED Mr. Sumet Techakraisri CHASE NOMINEES LIMITED 1 HSBC BANK PLC-CLIENTS GENERAL A/C MORGAN STANLEY & CO. INTERNATIONAL PCL HSBC (SINGAPORE) NOMINEES PTE LTD STATE STREET BANK AND TRUST COMPANY Mrs. Yupa Techakraisri Bangkok Roman Catholic Mission

226,354,105 109,373,200 76,564,393 74,712,400 50,917,700 43,700,000 32,731,100 30,726,855 26,040,499 25,500,000

15.34 7.41 5.19 5.06 3.45 2.96 2.22 2.08 1.76 1.73

Total

696,620,252

47.21

52 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Audit Committee Report 2008

The Board of Directors of L.P.N. Development Public Company Limited appointed an Audit Committee comprised of 3 independent directors, with Mr. Amornsuk Noparumpa as the Chairman of Audit Committee, Mr. Thep Roongtanapirom and Mr. Weerasak Wahawisal as Audit Committee. In 2008, the Audit Committee held a total of 4 meetings and proceeded (according to regulations), in summary, as follows: (1) In the first trimester, the Audit Committee reviewed the financial statements in a meeting held with the executives and financial controllers of the Company as well as with the external auditor of the Company to consider any remarks that may have been found in the quarterly financial report. (2) The Audit Committee reviewed internal control systems and ensured that assets were being managed efficiently, with reports of the review included in all meeting agendas and followed up on important issues as well as conferred with the internal auditor in order to assess the efficiency and sufficiency of internal control mechanisms. (3) The Audit Committee reviewed operations to ensure that the Company complied with applicable provisions of the Stock Exchange of Thailand and complied with laws related to the Company’s transactions, meeting with the responsible executives and the internal auditor. (4) The Audit Committee considered the audit plan and the budget for 2009 as proposed by the internal audit department as well as the rotation of staff, training programs, sufficiency of human resources and the performance index and considered appointment, transfer and the annual evaluation of the heads of all internal departments. (5) The Audit Committee considered connected transactions of the Company and transactions with conflicts of interest based on principles of transparency and sufficient disclosure of information as a basis in accordance with the Company’s policy and good corporate governance principles. (6) The Audit Committee considered the auditor and the auditor’s compensation for proposal to the Board of Directors for approval of the Annual General Shareholders Meeting in 2008. The Audit Committee considered the performance of the Company’s external auditor in the previous year and proposed DIA Accounting Office, namely Ms. Pornsaran Rungcharoenkijkul Certified Public Accountant No. 3255 or Ms. Vilairat Rojenakarin, Certified Public Accountant No. 3104 of, as the auditors of the Company in 2009 and approved the compensation for the external auditors for 2009 to the Board of Directors for further presentation to the Annual General Meeting of Shareholders to consider and approve the appointment of the external auditor and compensation.

On behalf of the Audit Committee Mr. Amornsuk Noparumpa Chairman of Audit Committee 26th January 2009

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Report on the Responsibility for Auditing Financial Statements and Corporate Governance

The Audit Committee emphasizes the importance of internal controls and risk management which has been implemented continuously so that the Company has sufficient internal controls to carry on business and that is appropriate and coincides with the level of risk which is at an acceptable level. Information regarding the accounting system has been disclosed sufficiently, the financial statements have been certified according to generally accepted standards, rules and regulations have been complied with, rules relating to the Companyâ&#x20AC;&#x2122;s transactions have been adhered to and all other principles required to support good corporate governance have been implemented on a continual basis.

54 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Management Structure

Structure of the Directors of the Company The Board of Directors of L.P.N. Development Public Company Limited is comprised of senior members with the knowledge, ability and experience to benefifit the company with a total of 14 persons comprised of: - Independent Directors 7 persons (50%) - Non-Executive Directors 2 persons (14.3%) - Executive Directors 5 persons (35.7%) The Board of Directors is comprised of 14 directors as follows: 1. Mr.Pakorn Thavisin Chairman and Independent Director 2. Professor Siri Keiwalinsrit Vice Chairman and Independent Director 3. Mr. Tawechai Chitasaranachai Vice Chairman and Independent Director 4. Mr. Amornsuk Noparumpa Director and Chairman of Audit Committee 5. Mr. Thep Roongtanapirom Director, Independent Director 6. Mr. Weerasak Wahawisal Director, Audit Committee and Independent Director 7. Mr. Vudhiphol Suriyabhivadh Director, Audit Committee and Independent Director 8. Mr. Tirachai Panchasarp Director (Non-Executive) 9. Mrs. Jongjit Thapanangkun Director (Non-Executive) 10. Mr. Tikhamporn Plengsrisuk Executive Director 11. Mrs. Yupa Techakraisri Executive Director 12. Mr. Pichet Supakijjanusan Executive Director 13. Mr. Kumpee Chongthurakit Executive Director 14. Mr. Opas Sripayak Executive Director Ms. Somsri Techakraisri is the Company Secretary. Consolidation or Separation of Positions The Chairman of the Board of Directors is not the same person as the Chief Executive Offificer (CEO). The Chairman of the Board of Directors is independent from the executives and his duties are separated in forming policy, oversight and management. The Chairman of the Board of Directors is the chairman at all meetings of the Board of Directors and forms the policy, makes planning and strategy for the executives to carry out and all of the directors of the company are free to propose agenda for the meeting to consider, voice their opinions about the companyâ&#x20AC;&#x2122;s operations and carefully consider any conflicts of interest so it is proper, transparent and accountable. The CEO is responsible to the Board of Directors in overseeing the operations of the company so that they coincide with the policy of the Board of Directors, with executive directors following up on the managers work and holding meetings together to report progress of operations and the companyâ&#x20AC;&#x2122;s performance every month as well as delegating authority to the executive branch regarding responsibility and the amount of money that can be approved at each level in writing. Duties and Responsibilities of the Board of Directors The Company has specified that the duties and responsibilities of the Board of Directors should be in accordance with the principals of good corporate governance of the Stock Exchange of Thailand. The policy regarding rules of conduct for the Board of Directors of a listed company according to the Offifice of the Securities and Exchange Commission is as follows: 1. Execute duties according to the law, the objectives of the company, the articles of association of the company and the resolutions of the shareholders meetings honestly and with care and responsibility on a regular basis and to protect the interests of the shareholders equally; 2. To set the vision, strategy, policy and direction of the operation of the company and oversee the management to ensure that they comply with the policies efficiently and effectively to add the highest value to the company and its shareholders sustainably; 3. Disclose information to shareholders, investors and stakeholders in full transparently and on time; 4. Provide for internal control mechanisms and internal audit mechanisms that are efficient; 5. Provide for risk management that is efficient and is monitored at all times; 6. Provide for oversight in following principals of good corporate governance with regular follow up; ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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7. Provide for the company secretary to follow oversee the activities of the Board of Directors and to help the Board of Directors and the company comply with the provisions of the law and other relevant provisions; 8. Provide a business ethics code for the Board of Directors and the executives and staff as standard for operations in the company; 9. The Board of Directors can solicit the opinion of professionals regarding the business by retaining consultants with the company’s funds; 10. Set the date time and place of the shareholders meeting as well as the agenda of the meeting, close the share registry book, suspend share transfers and summarize the performance for the shareholders to consider. Setting the Qualifications of Independent Directors The Company has defined the qualifications of “Independent Directors” according to the provisions of the Office of the Securities and Exchange Commission in order to create confidence of the shareholders, investors and to maintain a good balance in management. “Independent Directors” means a director that has no duty to manage the company, its subsidiaries, affiliates and is independence from the management and the controlling shareholders, has no relation to the business with the company in a way which would prevent him from exercising his independence, is a senior person that is accepted and respected in society and business, has no bad history, has no court cases or disputes and has not broken the law or any good morals. The qualifications of an independent director as per the criteria of the Office of the Securities and Exchange Commission are as follows: 1. Must not hold more than 1% of the shares entitled to vote in the company, the parent, the subsidiary, affiliate or other legal entity that may have a conflict, including shares held by related persons; 2. Must not be involved in the management/ staff/ employees/ consultants on a monthly salary/ have authority to control the company, the parent, the subsidiary, affiliate, subsidiaries on the same level or other legal entity that may have a conflict at present or in the past 2 years before appointment; 3. Must not have any blood relations or legal relations as a parent, spouse sibling or child including children in law, with executives, majority shareholders, authorized persons or persons proposed to mange or those with authority over subsidiaries or affiliates. 4. Business Relations 4.1 Type of Relation 4.1.1 Relations that involve professional services - Auditors, other professionals such as legal consultants, financial consultants, appraisers etc. - Positions that are not independent • Auditors: prohibited • Other professionals: transactions over Baht 2 Million 4.1.2 Trade/Business Relations (Same guidelines as the rules governing connected transactions of the Stock Exchange of Thailand) - Type of Relation: covers all types of business such as ordinary transactions, lease transaction/ lease of real estate/ asset transactions/ services or giving or taking financial assistance - Transactions that are not independent: • Transactions over or equal to Baht 20 Million or more than or equal to 3% or the NTA of the Company whichever is lower based on the total value of the transaction over the past 6 months prior to the transaction. • In the event of relations as per (a) with juristic persons, persons that would not be considered independent are majority shareholders, directors (save for independent directors/audit committees) and executives or partners of that juristic entity. 5. Must not be a director that is appointed as an agent of a director of the company, a majority shareholder or shareholder that is involved with a majority shareholder of the company; 6. Must not have any other issues that would prevent him from giving independent opinions 7. Independent Directors with the qualifications under numbers 1-6 may be appointed by the Board of Directors to make decisions on the business of the company, its parent, subsidiaries, joint venture companies, subsidiaries of the same level or juristic persons that may have a conflict of interest through a collective decision. Selection of Independent Directors and Executives At present, half of the Board of Directors are independent directors, which provides a balance and is not a problem in voicing opinions or in being the representative of minority shareholders. They are selected by the nomination committee which reviews their qualifications, appropriateness based on the variety of the qualifications that would benefit the company and then submits the choice to the Board of Directors to consider.

56 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Positions as director in another company The Board of Directors of L.P.N. Development Public Company Limited are senior members with knowledge ability and experience and high responsibility. In dispensing their duties in the past, all directors had enough time to give advice, knowledge and recommendations and be involved in the activities of the company. Regarding being a director in another company apart from the company and subsidiaries, there is a report given to the Board of Directors to be aware and to record the changes and the company does not limit the number of companies that the directors can be. In any case, the company has a system for management of time and information that is sufficient. The Committees The Board of Directors has set up the committees to consider specific issues and to coincide with principals of good corporate governance as follows: Audit Committee The Board of Directors appointed the Audit Committee comprised of 3 persons with 2 out of 3 of the members having knowledge and experience in accounting. The term of appointment is 2 years. The names are as follows: 1. Mr. Amornsuk Noparumpa Chairman of Audit Committee 2. Mr. Thep Roongtanapirom Audit Committee 3. Mr. Weerasak Wahawisal Audit Committee Ms. Paverisa Vasithtrakul is the Secretary of the Audit Committee. In 2008, the Audit Committee held 4 meetings with directors joining the meeting on each occasion and coordination and follow up to ensure that the opinions of the Audit Committee that came out of the meeting agenda were clear and were reported to the Board of Directors. The Duties and Responsibilities of the Audit Committee 1. To ensure that the Company implements internal controls and internal audits appropriately and that efficiently. 2. To consider and appoint the auditor of the Company as well as to consider the auditorâ&#x20AC;&#x2122;s remuneration. 3. To ensure that the Company complies with laws and the shareholders resolutions of the Company. 4. Advise the executive branch on improvement of operations to reduce risk and to ensure operations with efficiency. 5. Advise on policies regarding good corporate governance and make reports on the compliance with principals of good corporate governance. 6. Fix the scope of internal auditing and consider the report of the internal audit office. 7. Advice the Board of Directors reading appointment, transfer, removal and compensation for the Secretary of the Audit Committee. 8. Retain external advisors to advise or assist with internal auditing with the approval of the Board of Directors. 9. To perform other duties as delegated by the Board of Directors and as the Audit Committee deems fit. The Nomination and Remuneration Committee The Board of Directors has appointed the Nomination and Remuneration Committee with a total of 7 persons, comprised of 5 Independent Directors and 2 Executive Directors with a two year term. The names of the Committee are as follows: 1. Mr. Amornsuk Noparumpa Chairman of the Nomination and Remuneration Committee and Chairman of Audit Committee 2. Mr. Tawechai Chitasaranachai Independent Director 3. Mr. Thep Roongtanapirom Independent Director 4. Mr. Weerasak Wahawisal Independent Director 5. Mr. Vudhiphol Suriyabhivadh Independent Director 6. Mr. Tikhamporn Plengsrisuk Chief Executive Officer and Executive Chairman 7. Mr. Pichet Supakijjanusan Executive Director Ms. Somsri Techakraisri is the Secretary of the Nomination and Remuneration Committee. Following approval of the Nomination and Remuneration Committee by the Board of Directors on November 6, 2008 the Nomination and Remuneration Committee held 1 meeting with all directors attending the meeting. In February 2009 the Board of Directors approved the charter for the scope of duties of the Nomination and Remuneration Committee as follows: ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Duties and Responsibilities of the Nomination and Remuneration Committee 1. Selection 1.1 Propose criteria for selecting Directors of the Company, the Committees and high level executives. 1.2 Select the persons with the appropriate qualifications to be Directors of the company, members of the committees and high level executives and propose them to the Board of Directors. 1.3 Propose criteria for evaluating the Directors of the Company and the CEO. 2. Remuneration 2.1 Propose criteria for setting the remuneration of the Directors of the Company, the Committees members, high level executives and staff of the Company. 2.2 Consider improving the policy and structure of managing remuneration of the Directors of the Company, the committees members, high level executives and staff to coincide with the market conditions at the time for proposal to the Board of Directors. Development of the Directors The Company supports directors to attend seminars to improve their knowledge on a regular basis as well as those involved in corporate governance. The Directors office will coordinate on the topics for seminars at the Stock Exchange of Thailand, the Office of the Securities and Exchange Commission and the Institute of Thai Directors. Risk Management Committee The Board of Directors did not appoint a risk management committee but instructed all divisions in the company to analyze risk factors in the unit they are responsible for and find ways to manage the risk to achieve the goals that the Company has set. The management has the duty to advise and follow up closely on the report of the Board of Directors at the same time as proposing the yearly report. If the risk may damage the Company during the year, the issue can be submitted to the Board of Directors to consider on a case by case basis. Self-Evaluation by the Board of Directors In 2008 the Company improved the form for self evaluation of the Board of Directors which was done by the Nomination and Remuneration Committee according to the form from the Institute of Thai Directors used in evaluating the performances for the award Board of the Year. The said form contains all the necessary information regarding good corporate governance. The Nomination and Remuneration Committee will summarize the results and their recommendations to the Board of Directors to improve the operations of the Company. Remuneration of Directors and Executives The Company has set a policy of remuneration for directors and executives that is clear and transparent. For the remuneration of directors, members of the Nomination and Remuneration Committee compare the remuneration of directors in similar industry to be according to their duties and responsibilities if they are directors in the committees, it will be proposed to the Board of Directors and approved by the shareholders meeting. Remuneration for executives the Nomination and Remuneration Committee considers their remuneration based on appropriateness and to be in accordance with their duties and responsibilities compared with the remuneration of those in comparable industries. This will all be in accordance with the policy of the Board of Directors and the performance of the Company and the performance of the executives and will be proposed for approval from the Board of Directors. The remuneration of the directors and executives can be divided into 2 parts as follows: 1. Cash remuneration which is comprised of meeting allowances and pension 1.1 Remuneration of Directors in 2008

58 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Number of Directors Compensation for 2008 (persons) Baht/Year/ Person Total Chief Executive Offificer and Executive Chairman 1 900,000.00 900,000.00 Vice Chairman 2 600,000.00 1,200,000.00 Audit Committee 1 840,000.00 840,000.00 Director & Audit Committee 2 720,000.00 1,440,000.00 Director 3 300,000.00 900,000.00 Director & Executive Director 5 300,000.00 1,200,000.00 Total 14 6,480,000.00

Pension for 2007 paid in 2008 Baht/Person Total (Baht) 637,500.00 637,500.00 425,000.00 850,000.00 595,000.00 959,000.00 510,000.00 1,020,000.00 212,500.00 637,500.00 212,500.00 850,000.00 4,590,000.00

Position

1.2) The remuneration of executives is comprised of wages, bonus and provident fund and there are 10 executives with a total remuneration of Baht 11,936,640 (Eleven Million Nine Hundred Thirty Six Thousand Six Hundred and Forty Baht) 2. Other Remuneration -NoneThe Executive Directors that attended the meetings In 2008 the details of the various meetings of the Board of Directors is as follows: Number of times Directors attended meetings from the total Name 1. Mr. Pakorn Thavisin 2. Professor Siri Keiwalinsrit 3. Mr. Tawechai Chitasaranachai 4. Mr. Amornsuk Noparumpa 5. Mr. Thep Roongtanapirom 6. Mr. Weerasak Wahawisal 7. Mr. Vudhiphol Suriyabhivadh 8. Mr. Tirachai Panchasarp 9. Mrs. Jongjit Thapanangkun 10. Mr. Tikhamporn Plengsrisuk 11. Mrs. Yupa Techakraisri 12. Mr. Pichet Supakijjanusan 13. Mr. Kumpee Chongthurakit 14. Mr. Opas Sripayak

The Board of Directors The Executive Directors total 8 times total 24 times







8 8 6 7 8 7 8 6 8 7 8 8 8 8

24 20 24 23 24



Audit Committee total 4 times

Nomination and Remuneration Committee total 24 times

4 4 4 -

1 1 1 1 1 1 1 -

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Involvement in Activities by the Directors The management does a schedule of the activities so the Board of Directors can be involved in the Company’s activities and the staff activities on a regular basis as well as holding meetings outside the company to hear the progress on the projects at the site. In 2008 the Board of Directors were involved in the following activities apart from meetings: 1. Meeting to see the progress on projects under construction 2. Meeting out of the office to consider the business plan 3. Joining in yearly activities held for customers in all projects 4. Activities for the anniversary of LPN and pouring water ritual 5. Directors meeting the staff at the New Year party Good Corporate Governance The Company’s Board of Directors recognizes the importance of good corporate governance and is well aware that good corporate governance can improve the Company’s competitiveness. Therefore the Board of Directors emphasizes management based on honesty, ethics and morality according to principals of good governance, which makes the company transparent, efficient and effective, stable and sustainable as well as increasing the economic value and stability for shareholders and stakeholders. The Company has announced the business ethics of the Board of Directors and of the staff as well as compliance with the principals of efficiency economy which is announced in writing to be complied with by directors and staff to ensure that everyone complies with the duties correctly in accordance with the principals of good governance which are also announced on the website www.lpn.co.th The Principals of Good Corporate Governance of The Company are as Follows: Category 1 : Rights of Shareholders The Company respects the basic rights of shareholders as the investors and owners of the company by treating all shareholders equally and all shareholders can learn about the operations policies or connected transactions in full through the Company’s website www.lpn.co.th both in English and in Thai or at the website www.set.or.th Shareholders can be confident that their rights are protected at all times for example: 1. Right to attend general meeting of shareholders 1 time per year at the appropriate time, date and place whereas the Company will send an invitation for the meeting together with documents relating to the meeting regarding the opinions of the Board of Directors on all agenda with the following details; - Information regarding persons proposed to be directors in place of directors that resigned according to their term - Information regarding persons proposed to be directors - Articles of Association regarding the shareholders meetings - The documents and evidence which the shareholders attending the meeting have to show, the method of authorizing a proxy, registration and voting in the shareholders meeting - A map of the location of the shareholders meeting - Proxy form B (the form that specifies the agenda for which the proxy is given in detail). The Company has made the proxy forms according to the announcement of the Ministry of Commerce which has 3 forms namely, Form A, Form B, and Form C and allows the shareholder to choose the type of proxy form required and it can be downloaded from the Company’s website so the shareholders can consider how they want to vote on the various agenda no less than 7 days in advance. The Company also advertises the meeting for no less than 3 consecutive days at least 3 days prior to the meeting. Registration for the meeting is simple and can be done in advance no less than 1 one hour prior to the meeting. 2. The Company has expanded the method of advertising the shareholder’s meeting and the related documents through the Company’s website www.set.or.th both in English and in Thai 20 days in advance so that shareholders have more time to decide on the important issues. 3. The Company has retained Thailand Securities Deposit Co., Ltd. (TSD) which is the registrar of the Company’s shares to send out the meeting invitation to all shareholders no less than 21 days prior to the meeting. 4. The meeting allows shareholders to attend the meeting even after the meeting has started and allows shareholders to vote on agenda that are being considered and have not passed a resolution and are counted as a quorum for the meeting starting from the agenda being considered for solution when they enter the meeting. 5. Prior to the shareholders meeting the Chairman of the Board of Directors introduces all of the members of the Board of Directors and the

60 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


auditor of the Company that is present at the meeting and advises the shareholders of the method of voting and the shareholders rights. The Chairman controls the meeting to be in accordance with the agenda announced in the invitation to the meeting, controls the time to ensure all issues in each agenda are considered and allows shareholders to voice their opinions and ask questions about the operation of the Company and its subsidiaries as well as recording the meeting in full and summarizing the resolutions and counting the votes transparently and fairly. 6. The Company discloses the top 10 shareholders of the company as of the date of close of the share registry and suspension of trade prior to the annual general meeting of shareholders via the Company’s website www.set.or.th both in English and in Thai. 7. At the annual general meeting of shareholders in 2008, in the agenda of appointing new directors in place of directors resigning at the end of their term, the Company gave the shareholders the chance to vote on each director allowing the shareholders to vote on the director they wanted. 8. The Company introduced e-voting by Thailand Securities Deposit Co., Ltd. (TSD) in registering and counting the quorum for the meeting as well as passing resolutions on the agenda during the meeting. 9. The Board of Directors allows the shareholders to voice their opinions and recommendations during the meeting or pose questions on various agenda freely prior to passing the resolution. 10. The Company makes a report of the shareholders meeting following the meeting in detail and sends it to the Stock Exchange of Thailand and the Ministry of Commerce within 14 days and posts it on the Company’s website www.set.or.th both in English and in Thai. 11. The Company is considering allowing minority shareholders to propose directors and agenda through the website for the highest benefit of the Company. Category 2: Equitable Treatment of Shareholders The Company does business based on principals of ethics and responsibility to society and all those involved. The Board of Directors operates with the highest interest of the shareholders considered equally, respecting the rights of shareholders ownership rights without favoring any particular group of shareholders. Therefore, shareholders can be confident that their rights will be protected and respected. The Board of Directors will protect the shareholders rights as follows: 1.1 The Company discloses sufficient information to the shareholders and on time regarding the operations, policy and information regarding connected transactions correctly and in full as well as discloses information necessary for shareholders to make decisions though the website of the Company www.set.or.th both in English and in Thai 1.2 The Company holds the shareholders meeting in accordance with the agenda announced in the invitation to the meeting and the Company does not add agenda that was not informed in advance. If additional agenda are proposed, the shareholders have to approve by no less than one third of the shareholders present at the meeting and entitled to vote. 1.3 At all shareholders meetings, the Company sends the invitation to the meeting together with documents with information regarding the meeting in full detail with the opinion of the Board of Directors on each agenda within the period prescribed by law as well as announcing the invitation and documents in advance so shareholders have more time to consider it, via the Company’s www.set.or.th both in English and in Thai. 1.4 If shareholders can’t attend the meeting, the Company prepares proxy forms according to the form of the Ministry of Commerce together with the invitation so that any shareholders that intend to appoint a proxy to attend the meeting by appointing one person or an independent director to attend the meeting to reserve the right of the shareholder. 1.5 The voting rights of shareholders is according to the amount of shares held, with one share equal to one vote. 1.6 The Company controls the use of insider information and prohibits the directors and executives from using essential inside information of the company and its subsidiaries that has not been disclosed to the public for their own benefit or that of the shareholders, including for purchase of securities of the company. Directors, executives and staff who have access to insider information must suspend purchase of securities of the company for one month prior to disclosure of the information to the public. - if any director or executive purchases, sells, or receives transfer of securities of the company he/she must announce it to the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand within 3 days from the date of the change and announce it to the Company Secretary as well as announce the shareholding of the company by the director or spouse as an ordinary agenda in the Board of Directors meeting held each trimester.

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- the Company has a clear way of monitoring and solving the problem of conflicts of interest. The Audit Committee has a duty according to its charter to audit compliance with the rules and articles of association of the company to be in accordance with the regulations of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission and if the meeting passes a resolution that may be a conflict of interest or a connected transaction, the Company will disclose the value of the transaction, the name of the contracting party and the person connected, the reason and necessity for the transaction and other details both in Thai and English via the website of the Stock Exchange of Thailand www.set.or.th and the Companyâ&#x20AC;&#x2122;s website www.lpn.co.th Category 3 : Role of Stakeholders The Company gives importance to the stakeholders and operates business with responsibility and fairness to all those involved focusing on developing the company to be stable, sustainable and able to create appropriate revenue for the shareholders and protect the interest and assets of the company with prudence of businessman. The Company also looks after the rights of the stakeholders by treating them equally as follows: Shareholders: The Company respects the basic rights of the shareholders under law and the articles of association of the company an treats the shareholders equally. The Company makes the shareholders confident that the information they receive is accurate and their profit is appropriate according to the policy of paying dividends of the company, there is control of connected transactions, protection against conflicts of interest, protection against use of insider information that is confidential and prohibits directors and executives who know inside information from using it for personal gain or from purchasing securities of the company especially within 1 month before disclosing the financial statements to the public. Customers: The Company values and acts with responsibility towards all customers at all times and takes responsibility for the quality and standards of its products as advertised or promised, keeps customer information confidential, maintains departments to hear complaints from customers in order to solve problems for customers in an expedient manner and builds a quality of life, bringing warmth to all members of the family and creating closer relations between customers through continuous activities. Trade Partners: The Company complies with the agreements and conditions of honest competition, equality and fairness, considering the highest interest of the company on the foundation of gaining fair compensation for both parties, keeping its promises with trade partners as well as building relations and understanding with each other, avoiding situations that may give rise to conflicts of interest by negotiating to solve problems amicably as well as not asking for or giving goods or services other than that agreed with customers. Competitors: The Company abides by the rules of fair competition through the use of friendly competition to support each other without damage to other businesses or to relationships with competitors. In the past the Company has never had any disputes with competitors. Creditors: The Company complies with the conditions of its trade agreements and loans pursuant to the agreement and obligations to creditors agreements in all respects honestly and to create confidence and trust with each other. Employees: The Company focuses on developing the potential and skills of staff at all levels building knowledge, expertise at their duties and development of their potential to become leaders as well as allowing staff to become involved in the direction of the operation with the same attitude supporting culture and a good work atmosphere, improving the environment to be safe for life, health and assets of the staff with various benefits such as annual health checks and provident fund as well as paying fair remuneration appropriate to the performance of each of the staff. Environment and Society: Focus on energy conservation, activities that support society for better life as well as conserving the environment to be sustainable which is a policy that is important and must coincide with the companyâ&#x20AC;&#x2122;s business. Category 4 : Disclosure and Transparency The Company emphasizes the disclosure of information that is accurate, transparent and widespread through various media so that investors and those related can obtain information quickly and at the same time via the website of the Stock Exchange of Thailand www.set.or.th and the Companyâ&#x20AC;&#x2122;s website www.lpn.co.th both in Thai and English and the Company has appointed a person in charge of disseminating information to investors and those involved as needed. In 2008, minority shareholders and general investors contacted the officers of the company and the Company considered it as an opportunity to build a good relationship and presently, minority shareholders and investors give great importance to information. The officers of the company maintain that they will disclose information equally. The Company is aware and is responsible for the reputation and accuracy of financial information and the Board of Directors discloses an accurate financial report in accordance with accounting standards and discloses information that affects or may affect the price of securities of the company or decisions to invest, complying with the laws, regulations and articles of association of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission and other government agencies strictly and follows any changes continually to ensure that the laws and regulations are up to date and are security that the shareholders have confidence in the business operations.

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Category 5 : Responsibilities of the Board of Directors 5.1 Structure of the Board of Directors The Board of Directors according to the affidavit registered with the Department of Business Development, Ministry of Commerce shows 14 directors comprised of 9 non-executive directors and independent directors and 5 executive directors with more non-executive directors than executive directors. The ratio of executive to non-executive directors is 64.3%. The management structure of the company is comprised of a total of 4 boards of directors: 1. The Board of Directors 2. The Executive Directors 3. The Audit Committee 4. The Nomination and Remuneration Committee The Company has fixed and separated the powers of the Board of Directors and management at all levels. All material decisions must be made and approved by each board of directors to have checks and balances and for transparency and fairness to all involved. The Chairman of the Board of Directors is independent from the executives and does not hold a position in other committees. The CEO, in the capacity of the head of the executive board of directors is responsible to the Board of Directors for overseeing the business operations and the performance of the company to be in accordance with the policy of the Board of Directors. The term of the directorâ&#x20AC;&#x2122;s position The directors of the company are appointed and removed by the shareholderâ&#x20AC;&#x2122;s meeting having a term of office according to the articles of association of the company. When their term expires, they may be reelected to the position again. The Company has not specified a ceiling on age and/or the number of terms that can be held consecutively and is confident that the age or number of terms is not an issue when compared to the valuable knowledge and ability and experience each person as and can use to benefit the company. The number of companies in which each director can have a position The Company discloses details of the information of the positions held by each director in the company in the Form 56-1. The Company is confident that it has no effect on carrying out their duties and in the past, the Company has received advice, recommendations and proposals regarding operations of business of the company that has been beneficial all along. Consolidation or separation of positions The chairman of the Board of Directors is not the same person as the Chief Executive Officer. The chairman of the Board of Directors is independent from the executives and has a separate duty to formulate policy to oversee and mange business. The chairman of the Board of Directors is the chairman of the meetings of the Board of Directors which formulates policy, business plans and strategy for executives to carry out and all directors of the company are free to propose agenda for the meeting and voice opinions on the performance of the company and carefully consider any conflicts of interest in the name of correctness, transparency and accountability. The CEO is responsible to the Board of Directors in overseeing operations of the company to ensure that they comply with policy of the Board of Directors with executive directors following up on the performance of the management and setting meetings to report the progress of operations of the company on a monthly basis as well as distributing authority through the executive branch in setting responsibilities and sums that can be authorized in writing. Leadership and Vision The Board of Directors has the duty to form the vision, mission, policy, goals, plans, budget and strategy of the business as well as control operations of the company according to the business plan and budget that has been set efficiently and effectively, with independence in voicing opinions and making decisions. The Company Secretary The Board of Directors is aware of the importance of the role and duty of the Company Secretary who assists and supports the operations of the company in accordance with the principals of good corporate governance and compliance with the regulations of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission. The Board of Directors has appointed Ms. Somsri Techakraisri, the Deputy Managing Director as the Company Secretary coordinating with the directors of the company and the management overseeing legal work and supporting compliance with principals of good governance as well as compliance with articles of association and regulations of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission as well as compliance with the resolutions of the Board of Directors and resolutions of the shareholders meeting. ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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5.2 The Committees 5.2.1 Executive Committee The executive committee of the company has 5 persons who are directors of the company and have knowledge, skills and experience in many areas and understand their role that they are responsible for and understand the business of the company well. The executive committee was appointed with the approval of the Board of Directors and has the duty to oversee management of the business of the company to be in accordance with the policy established by the Board of Directors with the best interests of the company and the benefit of the shareholders. 5.2.2 Audit Committee The Audit Committee is comprised of 3 persons who are directors of the company having the qualifications provided by the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission and have knowledge and understanding and experience in accounting, finance and management. The Audit Committee has the duty to comply with the charter of the Audit Committee as an independent committee acting in the name of the Board of Directors to solve problems of conflicts of interest, consider financial information proposed to the shareholders and those involved with the company, consider internal controls which the management and the Board of Directors set up and communicate with the auditor of the company. 5.2.3 Nomination and Remuneration Committee The Nomination and Remuneration Committee is comprised of independent directors and executive directors of the company according to the regulations of the Stock Exchange of Thailand with the following important role: 1. Consider criteria for payment of initial remuneration that is appropriate for the directors of the company, the executive directors and high level executives using information on remuneration in companies with similar business and similar sizes as well as the performance of the company and propose their opinion to the Board of Directors to approve the remuneration of the Board of Directors and high level executives. The remuneration of the directors of the company has to be proposed by the Board of Directors to the shareholders meeting for approval. 2. Consider criteria for selecting persons with the proper qualifications in terms of seniority, experience and expertise in various professions as well as their performance as directors in the past. Their choices will be proposed to the Board of Directors for approval before being proposed to the shareholders meeting, save for positions of directors of the company that are vacant for reasons other than the resignation from the term of office, in which case the candidate may be proposed to the meeting of the Board of Directors to appoint a person as director in the position that is vacant as per the articles of association of the company. 5.3 Role, duty and responsibility of the Board of Directors - See page 55 “Structure of the Board of Directors” 5.4 Meetings of the Board of Directors - See page 59 “Meetings Attended by the Directors and Executives” 5.5 Remuneration of the Board of Directors - See page 58 “Remuneration of the Board of Directors and Executives” 5.6 Development of the Directors and Executives - See page 58 “Personnel” 5.6.1 Welcome ceremony of new directors 5.6.2 Handing over the position - See page 68 “Personnel” 5.7 Self-Evaluation by the Board of Directors - See page 58 “Self-Evaluation by the Board of Directors”

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Report of the Nomination and Remuneration Committee The meeting of the Board of Directors of L.P.N. Development Public Company Limited No. 7/2551 held on November 6, 2008 passed a resolution to establish the Nomination and Remuneration Committee to comply with the regulations regarding the Committees of the Stock Exchange of Thailand with a total of 7 directors with a term of 2 years each comprised of the following persons: 1. Mr. Amornsuk Noparumpa Chairman of Audit Committee and Independent Director 2. Mr. Tawechai Chitasaranachai Vice Chairman and Independent Director 3. Mr. Thep Roongtanapirom Audit Committee and Independent Director 4. Mr. Weerasak Wahawisal Audit Committee and Independent Director 5. Mr. Vudhiphol Suriyabhivadh Independent Director 6. Mr. Tikhamporn Plengsrisuk Chief Executive Officer and Executive Chairman 7. Mr. Pichet Supakijjanusan Executive Director Ms. Somsri Techakraisri is the secretary of the Nomination and Remuneration Committee. In 2008 the Nomination and Remuneration Committee held 1 meeting on November 25, 2008 to consider the following issues: 1. To consider the charter of the Nomination and Remuneration Committee as a basis for operating, comprised of the structure, qualifications, term of office, role, duty and responsibility. 2. To consider remuneration for 2009 3. To consider bonus payment for 2008 4. To consider remuneration for directors of the company for 2009 and pension for 2008 5. To consider remuneration for high level executives for 2009 6. To consider the self evaluation forms of the board of directors 7. To consider increasing the channels through which the shareholders or investors can make recommendations regarding good corporate governance to the Audit Committee directly. The Nomination and Remuneration Committee has the duty and responsibility under the charter to propose the criteria and methods of selecting and proposing names of qualified persons to become directors of the company and of the Committees as well as high level executives to the Board of Directors for consideration as well as proposing methods to evaluate the performance of the directors. The committee has the duty to propose the criteria and methods and ways of improving the policy and structure of managing remuneration for the directors of the company and the committees and high level executives and staff of the company to be in accordance with the market condition for further proposal to the Board of Directors. Regarding selection of directors and high level executives, the Nomination and Remuneration Committee will select persons with qualifications that the company prescribes or in the event of selecting the CEO of the managing director, the committee will consider the knowledge and ability that is appropriate from the names in the succession plan taking into consideration the ratio, number and other factors of the Board of Directors as well as relevant laws and the articles of association of the company and principals of good corporate governance. In relation to the remuneration of the Board of Directors and high level executives, as mentioned in the annual report under the title remuneration of directors and high level executives-the Nomination and Remuneration Committee has considered the appropriateness according to its duty and responsibility as well as the regulations of the company and has considered the performance, results and business environment of the company, as well as the economy on the whole. Mr. Amornsuk Noparumpa Chairman of the Nomination and Remuneration Committee

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Personnel 1. Number of Personnel The Company has set up the management structure of the company and its subsidiaries with independence fairness and unity under the oversight of the CEO according to the policy to give importance to staff who are the heart of the businessâ&#x20AC;&#x2122;s sustainable growth. In 2008, L.P.N. Development Public Company Limited, Lumpini Property Management Co., Ltd., Lumpini Project Management Service Co., Ltd. and Pornsanti Co., Ltd. had a total of 662 staff comprised of: - Business development 33 persons - Brand and customer management 16 persons - Sales management 64 persons - Project management 67 persons - Community management 336 persons - Administrative and Personnel Management 49 persons - Revenue management 73 persons - Other support work 24 persons Total 662 persons The total income for all 662 employees in 2008 was approximately Baht 300 million with approximately Baht 7.3 Million contributed into the employee provident fund in 2008. There was budget allocated to activities for staff in all departments of the company and the highest bonus paid in the industry to reward the dedication to the companyâ&#x20AC;&#x2122;s business, which not only is a strategy to win the hearts of the staff to stay with the organization while at the same time indirectly supporting savings and spending. Out of the total of 662 staff, there are handicapped staff who the company takes care of and are able to lead a normal life in society on their own. There are also approximately 500 housekeepers who are hired under the policy to create opportunities and work for people in the suburbs around the projects which the company develops who are paid fair wages and benefits, which gives them an appropriate quality of life and supports education as well as educating them to understand saving money. The number of staff is expected to increase as the company grows. 2. Management In managing the organization, the Company has adopted a management policy of a Balanced Scorecard to be used as to fix the direction of the strategy and operating the Company comprised of 4 different dimensions namely: - Financial Perspective - Customer Perspective - Internal Process Perspective - People Perspective It can be seen that the Company focuses on these 4 dimensions in operating its business in order to create a balance in operations. The Company has set forth a strategic flowchart as a guideline for managing the Company under the balance of these 4 dimensions, namely staff, by creating happiness, growth and sustainability of staff in developing their potential to become a quality organization. The Company uses this principal to manage staff in a unique manner. 3. Development Knowledge, skills and ability are also important and are developed and necessary for the workforce according to their relevant responsibilities and the mission of the organization which is a core value. Funds are allocated every year to training and to give an opportunity to everyone to access information and knowledge within the organization and outside and the company gives importance to sharing and exchange of experience both of success and obstacles via various methods.

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4. Core Value of the Organization In order to develop the potential of all of the staff in the organization, the Company uses the experience gained during the economic crisis during 1997 which helped the company discover its identity and set its core competency which was developed into the core value of the organization and has been used as the way to develop the efficiency of all the staff under the name “CLASSIC” under which each letter supports the vision and strategy which the company sets forth and is communicated to the new generation of the organization to understand the history and background of the company. The experience gained under the slogan “CLASSIC” is also shared. CLASSIC as the core value of the company Collaboration: Meaning: Cooperation in unison by the staff so that there is togetherness in working or in joining in activities of the company with a mindset that is ready to provide assistance understand each other’s role and achieve the same goal; Lateral Thinking: Meaning: New ideas that are different without fear of obstacles in order to improve, change and develop as well as be creative in a practical and measurable way allowing the company to grow without limits Alliance Meaning: Giving importance to partners in business supporting each other in good times and bad times and working as if with the same organization to succeed together Speed Meaning: Have initiative, adjust, change, develop work by thinking fast, acting fast and paying attention to detail, thinking outside the proverbial box so work is completed before schedule or faster than usual ahead of others which benefits the company both directly and indirectly Service Minded Meaning: Be considerate, think in the shoes of others and be assertive, provide service above and beyond your duty sincerely without discrimination immediately with a smile to create happiness and a good impression Integrity Meaning: Working honestly, without taking advantage of others, being responsible for words and actions and creating value for the company Cost Awareness Meaning: Using resources wisely, carefully and efficiently and with the mindset of an owner 5. Taking care of staff The Company appreciates the importance of staff and their important role as the driving force of the company’s growth efficiently and sustainably and tries to support the staff to work at the best of their ability, happily and the motivation to succeed. All of the executives have to listen to the ideas of the staff in all divisions regarding work, the organization, the environment, colleagues, supervisors, the management system under the supervision of high level executives who make the policy looking after the welfare of the staff and creating the opportunity to hold activities to communicate between the staff at all levels to use information to improve the internal system to stimulate the build the motivation to work with quality and to succeed efficiently. The Company takes care of the well being and safety of its staff according to the provisions of law in all respects and offers benefits and welfare regarding life insurance, accident insurance and health insurance based on basic needs and lifestyle as if staff are internal customers to make their lives balanced and happy during their time as staff by providing health insurance, annual physical check ups and activities. In addition, there is a welfare committee elected from the staff to recommend and voice opinions regarding welfare of the staff and to oversee and promote the value of staff. In order to promote ethics and morality among the staff the Company also focuses on the ethics and virtues of its employees by organizing activities that promote good behavior on a continual basis, such as the employees dedicating themselves to public service and to act in accordance with Buddhist values and sharing with the less fortunate in society to be an example and lead the way to do good and expand the result to others in the surrounding society.

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6. Preparing successors Preparing successors for important positions in the organization to carry on the management is another policy of the company so that there is no gap in the management of the company especially in 2008 the Company hired experts to devise a succession plan & succession identification so that there is a plan to support expansion of the company comprised of the following 1. Analysis of the organization and identification of the factors that create strategy This is a survey of the opinions about the direction of the business from the executives analyzing information regarding the management systems, personnel management and analysis of the important factors that create strategy. 2. Adjustment of the strategy to communicate the policy and strategy of the organization This looks for the factors of success and adjusts any models or systems of coordination and responsibility for joint strategy as well as communicating strategy in practice to achieve the goals of the organization. 3. Providing the criteria and selection Brainstorming to collect and evaluate information from the likely candidate in each division analyzing the strong point of each person and providing the method of developing the potential. 4. Follow up and evaluation of operations Providing recommendations and solutions to problems in operating the projects for used in personnel management to achieve the strategy.

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LPN Code of Conduct The Business Code of Conduct of the Board of Directors of L.P.N. Development Public Company Limited The code of conduct of the Board of Directors of the Company was established for the directors of the Company as a guideline to manage the Company according to the principals of Good Corporate Governance and for the directors to devote themselves to work ethically for the benefit of the company, the shareholders, the employees and other stakeholders. The Board of Directors of the Company established the policy of management of the organization to provide the guidelines to oversee the affairs of the Company to be efficient and to accomplish the objectives, the vision and the goals of the Company. As a result of the confidence that L.P.N. Development PCL has received from the shareholders, investors and the public regarding its standard of business, all the directors of the Company are compelled to comply with the provisions and intent of the law, as well as behave as a role model for employees to protect the reputation and image of the Company into the future. The Business Code of Conduct is as follows: 1. Honesty, Fairness and Virtue Directors must perform their duties with honesty and good faith, truthfulness and non-discrimination based on race, religion, sex, marital status or physical handicap. Directors must embrace the truth and must not cause misunderstandings either directly or indirectly, must not speak or do anything that is false and must not cause misunderstandings by refraining from speaking or doing something. 2. Independence Directors must make decisions and perform their duties independently without allowing personal benefit, reward, monetary or non-monetary compensation to take precedence over independence and must use information that is true and must perform duties in a reasonable manner. 3. Personal Transactions and Confidentiality Any personal transactions or business of directors must be separated from the business of the Company performed as a director. The name of the Company must not be used in personal transactions or business. Directors should avoid affairs which may cause disrepute to the Company, including avoiding disclosure of confidential information of customers, employees and of the Company’s business to third parties, unless authorized by the Company. Directors must also not use information that is obtained as a director in an improper manner. 4. Disclosure of matters of personal benefit Directors must disclose any benefits from personal business as well as any issue that may conflict with the Company’s benefits or may cause conflict of interest to the Company. Any business with the Company by the directors must be on an arm’s length basis in order to avoid any conflict of interest that may occur or that may be understood to have occurred. 5. Legal Compliance Directors must comply with the provisions of law, rules and conditions related to the operation of business and directors should not use legal loopholes for the benefit of the Company or for personal benefit. 6. Equal Opportunity to Shareholders Directors must protect the rights of shareholders in accordance with the trust given to the directors by the shareholders as well as consider the interests of the other stakeholders in the Company.

Performance of duties and responsibilities of the Board of Directors 1. Duties to the Company 1.1 Devote full time to the Company to perform directors duties and comply with principals of good corporate governance and the Company’s Code of Conduct. 1.2 Exercise independent discretion in overseeing the affairs of the Company. 1.3 Be responsible to the shareholders and consider the rights and interests of the other stakeholders based on ethical practices and legal compliance. 1.4 Find high level executives that have potential and that can devote themselves to the interests of the Company. 1.5 Ensure that the executive branch reports important matters to the Company so that the Company can perform efficiently. 1.6 Inform the Company in writing when a director is a consultant in another company, organization or association. Acting as a consultant must not directly conflict with the interests of the Company and performance of the director’s duty. A director should not hold shares in other entities that the director has an interest in or that may give rise to a business conflict with the Company. 2. Duties to the shareholders 2.1 Ensure that the Company has sufficient financial status and management that is proper and correct in order to create appropriate compensation for shareholders. 2.2 Ensure that the Company has disclosed a sufficient amount of information that is material, correct, accurate, up to standards and transparent to all shareholders equally. 2.3 Ensure that the Company values and respects the rights of all shareholders equally. 2.4 Ensure that the Company explains the details of the Company’s performance and its financial status, in accordance with information disclosure regulations. 2.5 Ensure that the Company appreciates the recommendations of the shareholders and implements the recommendations for the benefit of the Company. ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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3. Duties to the employees 3.1 Treat all employees fairly, without discrimination based on race, religion, nationality, sex, age, educational background or personal preference. 3.2 Listen to the opinions or recommendations of the employees and consider implementing them for the benefit of the Company. 3.3 Do not directly or indirectly violate the personal rights and freedom of the employees. 4. Duties to other stakeholders 4.1 Ensure that the Company complies with the provisions of applicable laws. 4.2 Ensure that the Company is aware of the effects on other stakeholders, the Community, society and the environment. Circumspection in the performance of duties 1. Attending Board of Directors meetings on every occasion and informing the Company in advance if unable to attend a meeting. 2. Obtaining information and knowledge of issues that affect the business of the Company. 3. Studying the laws, rules and regulations that affect the performance of directors of the Company. 4. Using sufficient time to carefully consider information in advance. 5. Considering and providing opinions independently. If a director disagrees with a resolution of the Board of Directors, such disagreement can be recorded in the minutes of the Board of Directors meeting. 6. Encourage communication between the Board of Directors and the auditor in order to create confidence that the auditor is working independently and efficiently with cooperation from the executive branch and the internal audit branch. 7. Perform directors duties according to the provisions of the law, regulations, rules and relevant articles of association as well as business standards and ethics. 8. In the event of any questions, the Board of Directors can request further information from the executive branch or the Companyâ&#x20AC;&#x2122;s advisors. 9. Refrain from engaging in any actions that may affect honesty, good faith and integrity. Directors and their families should avoid demanding, accepting or agreeing to accept things or benefits from persons related to the business of the Company such as customers, contractors and trade partners, save for on special occasions or traditional holidays, provided that the value is not excessive or extraordinary. Conflict of Interest 1. Directors should not use their position in a manner to obtain benefits for themselves or those close to them, whether directly or indirectly.

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2. Directors should inform the Company without delay in any of the following cases: 2.1 Accepting an invitation to act as director or consultant of another Company. 2.2 A director or family member participates or is a shareholder in a business that may have an interest that is in conflict with the interest of the Company. 2.3 A director has a direct or indirect interest in a contract made with the Company. The type of the contract, name of the parties and interest in the contract should be disclosed. 2.4 A director holding securities or debentures of the Company or its subsidiaries, specifying the number of securities and any changes. 3. Avoid conflicts of interest. In the event of a conflict of interest, the director must consider refraining from providing an opinion or from voting on the said agenda or avoid attending the meeting held to consider the issue in question or request to not receive the documents related to the agenda in question or resign from the position of director if the conflict of interest is material. 4. The executive directors must use extreme caution in any conflict of interest situations that occur while acting as an executive and as a director due to the trust given by the shareholders. 5. Directors should not invest in shares of the Company for short term profit. Use of Company Information 1. Do not use the information obtained as a director of the Company in any inappropriate manner. 2. Do not disclose any information such as confidential business information or information that may affect operation of business with third parties. 3. Do not purchase or sell shares while in possession of information that, if disclosed to the public, would affect the price of the shares. 4. Keep the information of the Company confidential. Take care not to let documents or information that is confidential to be disclosed or to fall into the hands of persons not associated with the Company in a manner that would damage the company. 5. Do not use information for personal benefit or the benefit of others especial y if such information is essential to a change in the price of securities which has not been disclosed to the public. 6. Do not announce information that may affect the price of shares of the company that has not been disclosed to the public including: 6.1 Speculation on earnings 6.2 Issue of new securities 6.3 Loans 6.4 Potential takeovers 6.5 Essential changes to the business 6.6 New investments 6.7 Problems related to liquidity


Business Code of Conduct of the Employees of L.P.N. Development Public Company Limited L.P.N. Development Public Company Limited is a company that is engaged in the real estate development business and takes responsibility for all stakeholders involved, including shareholders, customers, trade partners, contracting partners and employees and also takes responsibility for the environment and society. All of the Companyâ&#x20AC;&#x2122;s employees play a role in making the company succeed at its goals and vision set by the Company. The Company is determined for the employees of the Company to realize their responsibility that comes from the trust the Company holds from engaging in business. Due to the Companyâ&#x20AC;&#x2122;s success in operating the business, the Company has gained the trust of its customers, shareholders and the public in general and has therefore established a code of conduct for employees to follow. The code of conduct for employees was established as a preliminary guideline for employees to follow ethically and is a tool for the employees to use to remind themselves to use caution and to prevent employees from committing any breach of laws, rules or articles of association which may cause damage to the reputation of the Company. The Company has assigned the Human Resources Department to ensure compliance with the code of conduct while the employees perform their duties, with supervisors charged with overseeing their subordinates to comply with the provisions of the code of conduct. The business code of conduct of employees can be separated into 10 categories, each of which has its own detailed explanation and is given to each employee to follow: 1. Scope 2. Compliance with laws and adherence to the Companyâ&#x20AC;&#x2122;s rules 3. Reliability of information 4. Confidentiality of Information 5. Communication 6. Use of insider information to trade securities 7. Harassment 8. Gambling, alcohol consumption and narcotics 9. Giving and accepting gifts and entertainment 10. Engaging in other jobs or doing outside work In addition, the Company also has established rules for performance and responsibility of the employees towards the Company, customers, shareholders, supervisors, colleagues, their own duty, conflicts of interest and use of the Company information as a guideline for working together.

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Operating the Business According to Principals of ‘Sufficiency Economy’ of L.P.N. Development PCL

Ever since the establishment of the Company, the Company has always operated its business with a desire to create a balance between the interests of all parties involved as well as ensuring that the Company grows from the inside, while at the same time developing personnel. Following the economic crisis in 1997, the growth of the Company is based on the growth of project development that coincided with the strategy of the organization and the economy in general, while maintaining growth in a sustainable manner. The Company has established a business strategy that focuses on developing residential condominiums that are near business centers for target customers who have mid-range income, which is a large urban target group. Attention is also focused on managing the community that the Company is developing to have a proper standard of living with good surrounding environment and content society. The business policy of the Company can be seen to coincide with the Philosophy Of ‘Sufficiency Economy’ of His Majesty the King, which can be explained as follows: The Philosophy Of Sufficiency Economy “3 loops 2 conditions” 3 loops are comprised of : 1. Modesty Modesty 2. Reason 3. Building immunity 2 conditions are: Building 1. Knowledge Reason immunity 2. Virtue Three Loops 1. Modesty The Company’s business policy - Manage appropriate levels of growth, not rapid but not overly sluggish, focusing on internal strength for sustainable growth with appropriate risk management. - Fixing sufficient levels of profit, not taking advantage of customers or society. - Considering the effect of development of the project on the environment and society while finding measures to reduce adverse affects in all ways possible. 2. Reason - Development of residences for those who want to own their own residences. - Raising the quality of living of the residents by managing the community after transfer of ownership of the residence to achieve maximum efficiency. - Create a balance of compensation and benefits for all parties involved. 3. Building Immunity - Development of the quality of personnel in terms of knowledge, skills, and maturity. - Establishing a strategy that is appropriate and takes into consideration all economic conditions, namely:

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Short term strategy - Increase the level of intensity of development of efficiency of products and services. - Expand the locations of projects to new locations. - Create differentiation in products and services focusing on managing communities under the strategy “Vibrant Community”. Mid-term Strategy - Distribution of customer base by expanding non-condo products. - Expanding income from previous customers bases by increasing potential and allies. - Expanding income from businesses in the group especially services, property management and real estate lease services. Long term strategy - Increase the potential of personnel and improve internal systems. - Increase the efficiency of community management focusing on potential for community management. - Adding value to the organization by building new innovations of products and services. Two Conditions 1. Knowledge The Company has established in its People Perspective for the Company to be an organization of learning and sharing knowledge, starting within the Company and expanding the operating results to the community which the Company is managing, starting by opening a learning center in every condominium developed by the Company. 2. Virtue The Company has specified that “virtue” is one of the Company’s cultures. Good corporate governance is one of the important missions of the Company for the shareholders as part of good governance which is important for all levels in the Company to follow in operating the business. The Company has used these principals to operate its business all along which has allowed the Company to operate smoothly and grow with quality, be accepted by customers, business persons or persons who are related to the Company. The Company has embraced this policy in order to achieve stability and quality for the future.


Internal Controls

The Company is aware of the importance of risk management and internal controls that are sufficient and appropriate to operations in order to reduce or prevent risks that may damage the Companyâ&#x20AC;&#x2122;s assets. The Company is also aware of the legal compliance requirements that are related to its business. The Company has taken the following steps regarding internal controls: 1) The Company has reorganized the structure of the organization to be appropriate with the business operations of the Company as well as specifying the duties and responsibilities and chains of command in each department in a clear manner. 2) The Company has specified the scope of power of its executives and staff at each level in a clear manner to create a balance of power and a system of checks and balances. 3) The Company has set forth rules and regulations and a manual for working to all control centers in writing. 4) The Company has set forth a scope of the risk in operating the business as well as the method for management of risk and the person responsible so that the level of risk of the Company is appropriate and has taken steps to see that the said scope of risk management is followed on a regular basis. 5) The Audit Committee has considered the appropriateness and sufficiency of the internal control system in terms of accuracy and accountability of the accounting system and financial reporting, asset management, compliance with articles of association and other legal provisions. 6) The Company has developed information technology on a continual basis in order to obtain up-to-date information that is useful in the decision making of executives. Based on the above principals, the Company is confident that the Company and its subsidiaries have sufficient and appropriate internal controls which are compatible with the changing situation as well as in compliance with the applicable laws and rules.

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Auditor’s Opinion on Internal Controls To: The Secretary-General The Office of the Securities and Exchange Commission We have conducted an audit of the financial statement of L.P.N. Development Public Company Limited for the year ended at 31st December 2008 and presented a report on the audit dated 19th February 2009. We would like to advise that we conducted the audit of the said financial statement in accordance with generally accepted auditing standards with the objective to express an opinion on whether or not the financial statement accurately reflects the status and operational results of the Company in accordance with generally accepted accounting principles. We have analyzed the efficiency of the internal controls regarding accounting of the Company as deemed appropriate for the purpose of setting forth the scope of auditing at an appropriate level. We have found no material discrepancies in the internal accounting control system that may essentially impinge the opinion expressed on the financial statement as at 31st December 2008. The management of L.P.N. Development Public Company Limited takes responsibility for providing the internal accounting audit system and ensuring strict compliance with the same. This requires estimation and discretion, considering the potential benefits and costs arising out of implementation of this system. This internal control system is able to provide reassurance to the management to a fair degree. However, we would like to state that our audit did not scrutinize every item but based its report on sampling. In addition, our examination and estimate of the efficiency of the accounting internal control system was intended solely for sake of the aforementioned audit and could not indicate all possible errors that may exist in the Company’s internal control. We wish to thank the Company’s staff for their cooperation in facilitating the audit of the Company’s financial statements D.I.A. Auditors Mrs. Suvimol Krittayakiern Certified Public Accountant No. 2982 19th February 2009

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Connected Transactions

1. Connected-transactions with subsidiary companies In 2008, the Company and the Companyâ&#x20AC;&#x2122;s subsidiary and affiliate companies entered into purchase and sales agreements or employment agreements, under the same conditions and market price as with third parties at that time. Connected transactions as of 31st December 2008 are as follows: 1.1 Connected transactions between L.P.N. Development PCL and Lumpini Property Management Co., Ltd., a subsidiary were as follows: Description Number Contract Price (Projects) (Baht) 1. Commission for providing of lessee 1.1 Residential unit 2 1 month rental fee/Lease Agreement with term of 1 year period 1.2 Office 1 1 month rental fee/Lease Agreement with term of 1 year period 2. Management of parking lots and fee collection 2.1 Management 2 Baht 72,000 /month 2.2 Fee collection 2 3% of total income 3. Management of Communities 3.1 Lumpini Place Ratchada-Thapra (January-February 08) 1 Baht 240,000 /month 3.2 Lumpini Ville Ramkhamhaeng 44 (February-May 08) 1 Baht 240,000 /month 3.3 Lumpini CondoTown Bordindecha-Ramkhamhaeng 1 - February-March 08 Baht 225,000 /month - April-May 08 Baht 337,500 /month - June-August 08 Baht 450,000 /month 3.4 Lumpini CondoTown Ramindra-Laksi 1 Baht 270,000 /month (June-September 08) 3.5 Lumpini Ville Ramindra-Laksi 1 - October 08 Baht 270,000 /month - November-December 08 Baht 300,000 /month 4. Condominium Registration Service 4.1 Condominium registration service (Lumpini Place Ratchada-Thapra) 1 Baht 160,500 /month 4.2 Condominium registration service (Lumpini Ville Ramkhamhaeng 44, 4 Baht 150,000 /month Lumpini CondoTown Bordindecha-Ramkhamhaeng, Lumpini CondoTown Ramindra-Laksi, Lumpini Ville Ramindra-Laksi) 5. Condominium System Instllation Service 5.1 Condominium System Instllation Service (Lumpini Place Ratchada-Thapra) 1 Baht 214,000 /month 5.2 Condominium System Instllation Service (Lumpini Ville Ramkhamhaeng 44, 4 Baht 200,000 /month Lumpini CondoTown Bordindecha-Ramkhamhaeng, Lumpini CondoTown Ramindra-Laksi, Lumpini Ville Ramindra-Laksi) 6. Sanitation 1 Baht 12,149.53 /month 6.1 Conference Room, 11th Floor (Lumpini Tower) th 1 Baht 30,000.00 /month 6.2 Office, 36 Floor (Lumpini Tower) 6.3 Parking (Lumpini Tower) 1 Baht 20,000.00 /month 6.4 Parking (L.P.N. Tower) 1 Baht 10,000.00 /month 6.5 Parking (Lumpini Residence Sathorn) 1 Baht 65,000.00 /month 6.6 Parking (Lumpini Plaza Asoke) 1 Baht 82,000.00 /month 6.7 Construction site, Sale Office and Customer Service Office - Based on the number of works 7. Room rental management 7.1 Office (Lumpini Tower) 1 500 Baht/month/unit 7.2 Office and residential units (L.P.N. Tower, Lumpini Center Happyland 3 10% of monthly rental fee E Building, Lumpini Ville Mary-Sathorn commencing from April 08) ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

75


Description Number Contract Price (Projects) (Baht) 8. Management of plaza located in the condominium project Lump sum Baht 151,200.00 /month 9. Administration and Management of building works 9.1 Lumpini Residence Sathorn 1 - January-June 08 Baht 200,000.00 /month - July-December 08 Baht 120,000.00 /month 9.2 Lumpini Plaza Asoke 1 Baht 188,160 /month 10. Maintenance works of Lumpini Residence Sathorn Building 1 Baht 27,000 / Month 11. Hire of work 11.1 Supporting service of lauching of project sale 4 Baht 1,500,000.00/Project/Time 11.2 Supporting service of sale support staff preparing 3 Baht 250,000.00/Month/Project 11.3 Supporting service of holding of inspection and acceptance of 5 Baht 500,000.00/Project/Time condominium unit for ownership transfer event 12. Management of â&#x20AC;&#x153;Vibrant Communityâ&#x20AC;? project Lump sum Baht 5,470,000.00 /month 13. Rental and service fees and public utilities charge (Lumpini Tower) 1 - January-March 08 Baht 220,000 / Month - April-December 08 Baht 21,000 / Month 14. Accured interest on promissory notes - Interest rate of 2.633% - Baht 613,885.76 1.2 Connected-transactions between L.P.N. Development Public Co., Ltd. and Lumpini Property Management Co., Ltd., a subsidiary company, were as follows: Description Number Contract Price (Projects) (Baht) 1. Project Construction Management 12 Baht 56,593,121.46 2. Sale and ownership transfer management - Sale management fee 13 0.30% of project value - Sale management fee (Lumpini Ville Bangkae, Lumpini Place Ratchada-Thapra, C Building) 2 0.50% of project value - Sale remuneration 10 1.50% of project value - Sale remuneration (Lumpini Ville Bangkae, Lumpini Place Ratchada-Thapra, C Building) 2 2.00% of project value 3. Project management (Repair) Lump sum Baht 595,000.00 /month 4. Accured interest on promissory notes - Interest rate of 2.633% Baht 616,843.37 - Interest rate of 1.675% Baht 3,028.77

1.3 Connected-transactions between Pornsanti Co., Ltd. and Lumpini Property Management Co., Ltd. were as follows:

Description 1. Room rental management service 2. Lease Procurement Services

76 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

Number Contract Price (Projects) (Baht) 3 10% of rental fee/month/unit 3 1 month rental fee/Lease Agreement with term of 1 year period


1.4 Connected Transactions between Pornsanti Co., Ltd. and Lumpini Project Management Services Co., Ltd. Description Number Contract Price (Projects) (Baht) 1. Project Construction Management - PST-Ramindra (Townhome) (Nov 08-Dec 08) 1 Baht 46,728.97 /month 2. Sale Management - Nawamin Commercial Building 1 Baht 50,000.00 /contract - P.S.T-Ramindra (Townhome) (Nov 08-Dec 08) 1 Baht 16,448.60 /month 3. Sale and transfer of condominium ownership - Nawamin Commercial Building 1 Baht 200,000.00 /contract 1.5 Connected Transactions between Lumpini Property Development Co., Ltd., an affiliate and Grand Unity Development Co., Ltd. were as follows: Description 1. Sale office sanitation fee

Number Contract Price (Projects) (Baht) 3 Baht 11,500.00 /month

1.6 Connected Transactions between Lumpini Project Management Services Co., Ltd., an affiliate and Grand Unity Development Co., Ltd. were as follows: Description Number Contract Price (Projects) (Baht) 1. Sale Management - Parkview Viphavadi Phase 4 (March 08- December 08) 1 Baht 32,184.00 /month - U Sabai (June 08-December 08) 1 Baht 150,318.33 /month - U Delight (October 08- December 08) 1 Baht 180,000.00 /month 2. Sale and transfer of condominium ownership - Parkview Viphavadi Phase 4 (first installment) 1 Baht 386,208.00 /contract

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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2. Connected Loans as at 31th December 2007 Lender Borrower Lumpini Property Management Co., Ltd. L.P.N. Development PCL Lumpini Project Management Services Co., Ltd. L.P.N. Development PCL

Type of Amount Term Loan (Million Baht) Promissory Note 10.0 AT CALL Promissory Note 59.0

AT CALL

Interest Rate (%) 2.633 2.633, 1.675

Necessity and Appropriateness behind Connected Transactions The Company’s investment structure plan shows that the Company wholly owns all shares in all subsidiary companies and one joint venture company, with clear plan to separate the scope of duties between the Company, the subsidiary companies and the joint venture company as detailed in item 2.5(4) to allow for management and administrative flexibility. The benefits in each company are combined as an overall financial statement so that conflicts of interest do not incur. Construction works and services require detail and quality, in order for customers and condominium residents to gain confidence and satisfaction. From past experience in this matter, the quality of the delivered works and the reputation of work teams in the subsidiary companies is widely acceptable and in delegating the works to the subsidiary companies, the Company is able to keep close control and supervision, and their agreed remuneration is the market price that is generally acceptable and fair. Steps in approving transactions Related-transactions incurred shall be presented in the form of an annual business plan and must receive, the consideration of the Executive Directors and the Company’s Board of Directors approval of the budget. Associated parties must then take action ‘via their individual departments and finally propose the transactions for approval by authorized persons by setting certain budget limits of approval for each particular position. Transactions will be audited by the internal audit department on a regular and proper basis. Trends for engaging in connected-transactions in the future Based on the reasons above, it is still necessary to engage in connected transactions for the maximum benefit of the organization in general. Considering the past performance, particularly the condominium management work, it can be seen that the directors of each juristic condominium who are joint owners in each condominium and who are not related to the Company still give their continual trust and extend the contract for the juristic condominium management each year, which shows the efficiency of the management, a fair price and building quality of living for the community according to the Company’s plan to build a vibrant community.

78 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


3. Connected Transactions with interested persons 3.1 The Company has a policy of granting a discount as a benefit to employees who reserve units at the Companyâ&#x20AC;&#x2122;s projects as follows: - The contract is made in the employeesâ&#x20AC;&#x2122; name. - The discount is applied upon transfer of title. - Payment of installments and transfer fees are the same as general customers. - The same discount is given across the organization. Lumpini Suite Pinklao Name Unit Number of Units 1. Siri, Naruemon Keiwalinsrit A-0918, A-0919 2 2. Suneeya Supakijjanusan A-1627 1 3. Visan Supakijjanusan A-1927 1 Total Limpini Place Ratchada-Thapra, C Building

Name Unit Number of Units 1. Ong-ard Yuennan C-0301 1 2. Veerasak Sudsung C-0302 1 3. Suradetch Roongjindaporn C-0401 1 3. Sutatta Porisa C-0406 1 Total

Total Selling Price Discount on Transfer (Baht) (Baht) 4,076,000.00 - 2,018,000.00 - 2,125,000.00 - 8,309,000.00 -

Remarks

Under construction Under construction Under construction

Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 1,247,000.00 77,047.00 Transferred on Jul 08 874,000.00 10,000.00 Transferred on Dec 08 1,247,000.00 77,047.00 Transferred on Oct 08 874,000.00 - Not transferred 4,242,000.00 164,094.00

Lumpini Ville Ramkhamhaeng 44 Name Unit Number of Units 1. Preecha Techakraisri B-0818, B-0822 2 2. Pairote Supakijjanusan B-1801 1 3. Suneeya Supakijjanusan B-1906 1 Total

Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 2,476,000.00 3,786.00 Transferred on Aug 1,433,000.00 35,211.00 Transferred on Apr 1,538,000.00 29,881.00 Transferred on Aug 5,447,000.00 68,878.00

08 08 08

Lumpini CondoTown Bodindecha-Ramkhamhaeng Name Unit Number of Units 1. Jirapat Wattanasopon A3-0608 1 2. Kanisorn Pimsan B4-0502 1 3. Wanchai Charoenvaiyajate B4-0333 1 4. Noraya Buathong A3-0426 1 5. Attapong Theerakanont B4-0701 1 6. Sanit Karakate A3-0410 1 7. Thasinee Jooysawat B4-0527 1 8. Panu Viensiri B4-0529 1 9. Pongsakorn Sittipant B4-0708 1 10. Unnop Sahachaiseree A3-0209 1 11. Roongtiwa Wongsupa B4-0327 1

Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 672,500.00 5,111.00 Transferred on Aug 916,400.00 10,260.00 Transferred on Jul 787,600.00 11,937.00 Transferred on Jul 657,500.00 6,049.00 Transferred on Oct 793,200.00 9,632.00 Transferred on Aug 685,500.00 4,997.00 Transferred on Sep 978,000.00 13,971.00 Transferred on Oct 776,400.00 12,201.00 Transferred on Jul 1,139,000.00 14,271.00 Transferred on Aug 670,500.00 4,883.00 Transferred on Aug 957,000.00 13,671.00 Transferred on Aug

08 08 08 08 08 08 08 08 08 08 08

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

79


Name Unit Number of Units Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 12. Surasawadee Suewaja B4-0530 1 804,400.00 40,201.00 Transferred on Oct 08 13. Bandita Piluekdeedetch A3-0609 1 672,500.00 5,324.00 Transferred on Aug 08 14. Panpen Saengjanpakdee A3-0412 1 657,500.00 - Not transferred 15. Kitchaimongkol Prasertsri A3-0415 1 905,000.00 4,259.00 Transferred on Aug 08 16. Daorueng Komonsing A3-0408 1 657,500.00 4,997.00 Transferred on Aug 08 17. Chairat Tongsak B4-0507 1 776,400.00 10,260.00 Transferred on Oct 08 18. Sumon Likasitwattanakul A3-0610 1 672,500.00 5,111.00 Transferred on Sep 08 19. Sombat Chanyuttakorn A3-0611 1 672,500.00 5,111.00 Transferred on Sep 08 20. Adisorn Achasrai B4-0728 1 793,200.00 12,465.00 Transferred on Sep 08 21. Buncha Sukcharoen B4-0304 1 759,600.00 10,038.00 Transferred on Aug 08 22. Unnop Wanwong A3-0615 1 1,065,400.00 4,355.00 Transferred on Aug 08 23. Korbchai Panitnun A3-0614 1 672,500.00 5,918.00 Transferred on Sep 08 24. Nirat Aksornpan B4-0508 1 978,000.00 13,971.00 Transferred on Aug 08 25. Anant Piyatanti A3-0411 1 685,500.00 - Not transferred 26. Thidarat Chaochaisri B4-0506 1 776,400.00 10,260.00 Transferred on Nov 08 27. Naruemon Chimnuttapan A3-0409 1 657,500.00 4,997.00 Transferred on Aug 08 28. Naree Phonprueksa B4-0501 1 776,400.00 9,428.00 Transferred on Jul 08 29. Sun Sukukawadee A3-0307 1 691,600.00 1,561.41 Transferred on Dec 08 30. Wirin Moon-in B4-0532 1 776,400.00 12,201.00 Transferred on Aug 08 31. Charan Kesorn A3-0513 1 820,000.00 - Not transferred Total 24,304,400.00 267,440.41 Lumpini Ville Ramkhamhaeng 26 Name Unit Number of Units Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 1. Mali Chomtruek D-0502 1 1,200,000.00 - Underconstruction 2. Porn-arpa Araya-utsanee E-0508 1 1,544,000.00 - Underconstruction 3. Sawinee Fukpoo A-0724 1 1,242,000.00 - Underconstruction Total 3,986,000.00 Lumpini CondoTown Ramindra-Laksi Name Unit Number of Units Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 1. Somsuk Sritongwat E1-0717 1 788,000.00 8,724.00 Transferred on Sep 08 Total 788,000.00 Lumpini Ville Ramindra-Laksi Name Unit Number of Units 1. Surasak Likkasithwattanakul AS-1235 1 2. Surasak, Somporn Likkasithwattanakul AS-1236 1 3. La-iet, Unchulee Ninsondhi AS-0728 1 Total

80 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 945,555.00 - Not transferred 945,555.00 1,101,600.00 2,992,710.00

- - -

Not transferred Not transferred


Lumpini Ville Prachachun-Phonghet Name Unit Number of Units Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 1. Nattapol Piyatanti B-1032,B-1131,B-1132 3 3,883,000.00 - Underconstruction 2. Saowanee Koopoonsup A-0903 1 1,201,000.00 - Underconstruction 3. Surasak, Somporn Likkasithwattanakul A-1809 1 1,242,000.00 - Underconstruction Total 6,326,000.00 Lumpini CondoTown Rattanatibet Name Unit Number of Units Total Selling Price Discount on Transfer Remarks (Baht) (Baht) 1. Nattapol Piyatanti A2-0201 1 756,000.00 - Underconstruction 2. Soawanee Koopoonsub A2-0707 1 756,000.00 - Underconstruction 3. Weera, Supaporn Wutikasemkit C2-0621 1 712,000.00 - Underconstruction Total 2,224,000.00 - Lumpini Place Rama 9-Ratchada Name Unit Number of Units 1. Pornpun Araya-utsanee A-0815 1 2. Nattapol Piyatanti B-2709 1 3. Soawaanee Koopoonsub B-1212 1 Total

Total Selling Price Discount on Transfer (Baht) (Baht) 2,025,000.00 - 2,273,000.00 - 2,081,000.00 - 6,379,000.00 -

Remarks

Underconstruction Underconstruction Underconstruction

Lumpini Ville Bangkae Name Unit Number of Units 1. Wiwat Chantapokai A-0502 1 2. Weera Wutikasemkit A-0802 1 3. Peerawut Pasuk A-1003 1 4. Sudarat Yanyongwerote A-1015 1 5. Supaporn Wutikasemkit A-1201 1 6. Thasinee Jooysawat A-1207 1 7. Parinya Changklang A-12A09 1 8. Thanasorn Panya A-2214 1 Total

Total Selling Price Discount on Transfer (Baht) (Baht) 1,030,000.00 - 1,040,000.00 - 1,050,000.00 - 1,070,000.00 - 970,000.00 - 1,150,000.00 - 920,000.00 - 1,050,000.00 - 8,280,000.00 -

Remarks

Underconstruction Underconstruction Underconstruction Underconstruction Underconstruction Underconstruction Underconstruction Underconstruction

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

81


Other Factors Influencing Investment Decisions

1. Dividend Payment Policies The Company has a policy to make dividend payments of no less than 50% of the net profits from the financial statements specifically for business, which is also applicable to payment of dividends of subsidiaries. In year 2008 the Company derives profit from the profit and loss statement specifically for business in an amount of Baht 1,205.44, having net profit per share equal to Baht 0.80 and determination of dividend payment is at Baht 0.41 per share. The interim dividend payment at Baht 0.14 per share was made on 29th August 2008 from operational result as at 30th June 2008 which shall be reported to the Annual General Shareholders Meeting of year 2009. Payment of dividends from operational result in year 2008 is under proposing to the Shareholder Meeting for consideration by which dividend payments policy of no less than 50% of the net profits from the financial statements specifically for business still be adopted. Payment of dividends by Pornsanti Co., Ltd., Lumpini Property Management Co., Ltd. and Lumpini Project Management Services Co,. Ltd. will be in compliance with their own Articles of Association, that is, at least one twentieth of the net profits must be set aside as a reserve until reaching one tenth of the Companyâ&#x20AC;&#x2122;s registered capital, before dividends can be paid. In year 2008 Lumpini Property Management Co., Ltd. has made dividend payment in aggregate of Baht 35.06 million and Lumpini Project Management Services Co,. Ltd. has made dividend payment in aggregate of Baht 11.79 million. Pornsanti Co., Ltd. on the other hand has yet made any dividend payment. Dividend Payment History Chart

Year Dividend payment rate/share 1994 Paid dividend is at Baht 2.50/share 1995 Paid dividend is at Baht 2.75/share 1996 Paid dividend is at Baht 1.00/share 1997 Paid dividend is at Baht -/share 1998 Paid dividend is at Baht -/share 1999 Paid dividend is at Baht -/share 2000 Paid dividend is at Baht -/share 2001 Paid dividend is at Baht -/share 2002 Paid dividend is at Baht 1.00/share 2003 Paid dividend is at Baht 2.50/share 2004 Paid dividend is at Baht 0.20*/share 2005 Paid dividend is at Baht 0.22/share 2006 Paid dividend is at Baht 0.26/share 2007 Paid dividend is at Baht 0.32/share

Note: * On 20th April 2004 par value of ordinary share was adjusted from Baht 10 to Baht 1

82 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Explanation and Analysis of the Management

The Overall Performance of the Company The Company, its subsidiaries and joint ventures had a total income of Baht 7.232.36 Billion, an increase over the same period in 2007 when total income was Baht 6.754 Billion, an increase of 7.08% from completion of construction of a total of 5 projects namely, Lumpini Ville Ramkhampheang 44, Lumpini Place Ratchada-Thapra, Lumpini CondoTown Bodindecha-Ramkhamheang, Lumpini CondoTown Ramindra-Laksi and Lumpini Place Ramindra-Laksi, with some income derived from on-going projects from 2007. Income from rent and services increased from 2007 by 18.84%. The ratio of initial profit from sales decreased from 34.67% to 31.24% as a result of the fluctuation of the price of construction materials in 2008. In any case, the Company was able to maintain its level of initial profit to be no less than 30% as planned. Net profit increased from 13.74% to 16.67% as a result of managing costs that is efficient and that measures that stimulate the economy by the government. 2008 2007 Item Q1  Q2  Q3 Q4  Q1-4 Q1  Q2  Q3 Q4 Q1-4 Sales Volume (Unt) 1,997  1,932  994  764  5,687  2,217  2,511  1,188  1,702  7,618  (MB)  2,900.58  3,482.13  1,605.24  1,077.20  9,065.14  2,067.95  2,413.40 1,707.25  2,514.68 8,703.28 1. Realization (Unt)  814 1,982  2,250 1,332  6,378  453 736  984  770 2,943 2. Revenue  (MB) 1,344.60 2,197.88 2,065.11 1,411.12 7,018.71  1,014.18 1,881.10 2,151.77  1,527.17 6,574.22 3. Cost (MB) 938.85 1,504.98 1,417.98  964.35 4,826.16 640.15 1,257.43  1,470.24 927.07 4,294.89 4. G/P  (%) 30.18 31.53 31.34 31.66  31.24 36.88 33.15 31.67 39.29 34.67 Financial Status As at 31st December 2008, the Company had total assets of Baht 8.4649 Billion, increased from Baht 7.175.76 Billion in 2007 or an increase of 23.28%. The main cause for this increase was due to an increase of current assets in the form of cash and cash equivalent in the amount of Baht 185.93 Million. Temporary investments-promissory notes were at Baht 1.050 Billion. Surplus increased to Baht 902.33 Million. The Companyâ&#x20AC;&#x2122;s total liabilities rose from Baht 3.3488 Billion in 2007 to Baht 4.362 Billion in 2008, an increase of Baht 1.01322 Billion or 30.26%, due to the Companyâ&#x20AC;&#x2122;s project financing for investment in projects that are under development and for the acquisition of empty land plots for development in 2008. The global economic crisis caused the Company to require reserves in order to have sufficient liquidity to complete the construction of projects. Capital Structure Capital structure in 2008 indicated that the Company had liabilities in the amount of 49.31% with shareholders equity at 50.69%. This shows that the capital structure is primarily based on shareholders equity that is higher than liabilities. The overall debt to equity ratio increased from 0.88 times in 2007 to 0.97 times. The average for 2007 for average debt to equity for 12 real estate developers listed on the Stock Exchange of Thailand was 1.26. If the ratio of interest-bearing liabilities to shareholders equity is considered, the debt equity ratio in 2008 is 0.58 times, compared with 0.58 times in 2007. Item 1. Selling Exp./Income (%) 2. Interest Exp./Income (%) 3. Gross Profit /Income (%) 4. Debt to Equity (Times) 5. Return on Total Asset (%) 6. Return on Equity (%)

Industrial Average 13.69 1.06 14.10 1.26 8.44 14.20

LPN 8.01 0.14 16.50 0.97 31.62 26.88

Remark: 12 Companies namely A, AP, LALIN, LH, LPN, MK, NOBLE, PRIN, PS, QH, SIRI, and SPALI ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

83


Liquidity and Profitability The average rate of net profit to total income for 12 real estate developers listed on the Stock Exchange of Thailand specifically for the housing project and condominium sector in 2008 was 14.10% while the Company’s average was 16.50%, which is higher than the average. This shows that the Company managed its business better than the industry as a whole. When the cash flow in the financial statement as at December 31, 2008 is considered, there is cash on hand and short term investment capital in the amount of Baht 1.69075 Billion, up from the amount in the same period last year which was equal to Baht 454.82 Million or an increase of 273.06% due to transfer of title of condominium units and reserves of cash for sufficient liquidity to develop the various projects that are ready for hand over in 2009. Major changes and future trends The Company’s strategy for operations in 2009 is as follows: 1. Development of condominium projects in locations where the company has projects developed already which are in locations with potential and there is still demand by customers and there has been a real survey of the demand of customers. 2. Develop condominium projects under the brand “Lumpini Place” and the brand “Lumpini CondoTown”, since both brands are one of the Company’s products that are strong and has a large existing customer base. Therefore, this customer group must be maintained. “Lumpini CondoTown” which was unveiled in 2007, was met with large popularity and in 2009 the Company expects to continue sales under the brand “Lumpini CondoTown”. Data from extensive market surveys and field research in 2006 that suggests that there is potential for large numbers of customers that require condominium in the price range of Baht 600,000-900,000 especially high in densely populated areas, who formerly had to rent flats and apartments for Baht 2,500-5,000 per month. Therefore, it is a good opportunity for the Company to offer its style of management of “Small Size Township” under the principal of a “Vibrant Community” to improve the lives of customers with a full range of facilities in the projects to bring confidence to customers to live in a good society together and communicate this to acquaintances to become customers of the Company in the future. 3. Operate the business together with Corporate Environment and Social Responsibility (CESR), which can be divided into 3 areas: 3.1 Responsibility to the environment surrounding the projects developed by the company 3.2 Responsibility for the community surrounding the project 3.3 Responsibility for the safety and sanitation of construction workers 4. Targets expected for realization in 2009 are as follows: Project 1. Projects continued from 2008 2. Lumpini Ville Ramidra-Laksi 3. Lumpini Ville Prachachun-Phongphet 4. Lumpini CondoTown Ratanatibet 5. Lumpini Suite Pinklao 6. Lumpini Ville Ramkhamhaeng 7. Lumpini Suite Rama 8 8. Lumpini Place Rama 8

Total

84 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

Nunber (Units) Value (Million Baht) 1,130 1,400 1,271 1,300 958 1,300 1,944 1,600 547 1,300 998 1,300 182 400 1,131 1,900 8,161 10,500


Plans for New Projects in 2009 The Company plans to launch the following new projects in 2009, worth a total of approximately Baht 11 Billion : Project Number (Units) Value (Million Baht) 1. Lumpini Place Ramindra-Laksi 2. Lumpini Ville Prachachun-Phongphet Phase 2 3. Lumpini Place Rama 9 Phase 2 4. Lumpini ….. 5. Lumpini ….. 6. Lumpini …. 7. Lumpini …. 8. Lumpini …. Total

%

500 1,200 1,100 1,200 800 2,000 1,200 2,000

700 1,500 2,600 1,200 800 1,500 1,200 1,500

6.4 13.6 23.6 10.9 7.3 13.6 10.9 13.6

10,000

11,000

100.0

ANNUAL REPORT 2008 L.P.N. Development Public Company Limited

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Report on the Responsibility of the Board of Directors of the Company for the Financial Report

The Board of Directors of the Company is responsible for the Companyâ&#x20AC;&#x2122;s financial report of L.P.N. Development Public Company Limited as well as the information that appears in the Report 56-1 and the Annual Report. The said financial statement has been prepared according to the generally accepted financial principles of Thailand using the appropriate accounting policies and using careful discretion and the best estimates in the preparation while at the same time disclosing sufficient information in the remarks to the financial statements. The Board of Directors of the Company emphasize the importance of the quality of the financial statement and have created appropriate and efficient internal controls as well as sufficient disclosure of essential information in the remarks to the financial statements and the explanation and the analysis, in order to be sure that the accounting information has been properly and accurately recorded for the maximum benefit of the shareholders and investors when using the financial statements. The Board of Directors of the Company have appointed an Audit Committee comprised of independent directors who have a knowledge and understanding of accounting and finance to oversee the quality of the financial statement and for internal controls. The Audit Committee has submitted its opinion in the report of the Audit Committee. Accordingly, based on the executive structure, internal controls and the results of the licensed auditor, the Board of Directors of the Company is confident that the Companyâ&#x20AC;&#x2122;s financial statement as of 31st December 2008 set forth the correct financial status, the operational results and the cash flow according to generally accepted accounting principles. Mr. Pakorn Thavisin Chairman

86 ANNUAL REPORT 2008 L.P.N. Development Public Company Limited


Auditor’s Report

To The Shareholders of L.P.N. DEVELOPMENT PUBLIC COMPANY LIMITED (1) I have audited the consolidated balance sheets of L.P.N. DEVELOPMENT PUBLIC COMPANY LIMITED AND SUBSIDIARIES and the separate balance sheets of L.P.N. DEVELOPMENT PUBLIC COMPANY LIMITED as at December 31, 2008 and 2007, and the related consolidated statements of income and separate statements of income, consolidated statements of changes in shareholders’ equity and separate statements of changes in shareholders’ equity, and consolidated statements of cash f lows and separate statements of cash f lows for the years then ended. These f inancial statements are the responsibility of the Company’s management as to their correctness and completeness. My responsibility is to express an opinion on these f inancial statements based on my audits. (2) I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance as to whether the f inancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the f inancial statements. An audit also includes assessing the accounting principles used and signif icant estimates made by management, as well as evaluating the overall f inancial statements presentation. I believe that my audit provides a reasonable basis for my opinion. (3) In my opinion, the consolidated f inancial statements and the separate f inancial statements referred to the above present fairly, in all material respects, the consolidated f inancial position of L.P.N. DEVELOPMENT PUBLIC COMPANY LIMITED AND SUBSIDIARIES and the separate f inancial position of L.P.N DEVELOPMENT PUBLIC COMPANY LIMITED as at December 31, 2008 and 2007 the results of their and its operations and cash f lows for the years then ended in conformity with generally accepted accounting principles.

Off ice of DIA International Auditing

Mrs. Suvimol Krittayakiern C.P.A. (Thailand) Registration No. 2982 19th February 2009

Annual Report 2008 L.P.N. Development Public Company Limited 87


Balance Sheets As at December 31, 2008 and 2007 Assets

Consolidated (Baht) Note

Current assets Cash and cash equivalents 3.1 Current investments-promissory note 3.2, 5 Trade accounts and notes receivable Accounts receivable-net 3.3, 6 Notes receivable Unbilled construction income 3.11, 7 Land and cost of project under development 3.4, 8, 16 Receivables-related parties 10.1 Inventories 3.5, 9 Current portion of long-term loans to related parties 10.2 Other current assets Advance payment to contractors Accrued income Prepaid expenses Others Total current assets Non-current assets Investment in subsidiaries and associates 2.6, 3.6, 3.17, 4, 10.3 Land and cost of project held for development 3.4, 8, 16 Assets for rent-net 3.7, 11, 16 Property, plant and equipment-net 3.8, 12, 16 Other non-current assets Withholding income tax Inventory deposit Others Total non-current assets Total assets

2008

2007

2008

2007

640,746,063.06 1,050,000,000.00

454,821,691.12 -

576,099,768.85 1,050,000,000.00

314,972,916.56 -

1,021,187.20 439,751.42 218,324,918.10 3,781,477,154.54 1,042,816.30 1,403,971,692.02

318,400.00 732,043.95 100,371,595.96 4,532,358,897.69 501,635,829.13

808,187.20 439,751.42 218,324,918.10 3,777,820,014.71 73,343,031.32 1,396,354,369.30

55,400.00 732,043.95 100,371,595.96 4,509,450,935.16 14,257.25 489,890,488.84

-

12,000,000.00

-

12,000,000.00

83,577,284.35 14,582,022.51 12,888,151.93 20,058,705.70 7,228,129,747.13

20,621,878.18 14,954,729.82 12,039,396.63 14,841,163.28 5,664,695,625.76

83,577,284.35 12,442,550.25 13,264,487.55 7,202,474,363.05

20,621,878.18 11,728,328.14 10,812,021.96 5,470,649,866.00

70,470,397.70

11,113,691.79

286,332,084.11

220,332,084.11

681,921,048.23 709,989,215.31 86,777,852.66

660,722,167.40 678,533,986.39 93,121,453.29

538,151,276.51 620,970,250.82 72,675,140.79

660,722,167.40 586,670,301.87 73,538,533.50

27,245,238.73 20,000,000.00 21,961,377.26 1,618,365,129.89 8,846,494,877.02

30,334,301.40 20,000,000.00 17,233,784.19 1,511,059,384.46 7,175,755,010.22

20,431,263.97 20,000,000.00 20,363,091.26 1,578,923,107.46 8,781,397,470.51

20,431,263.97 20,000,000.00 15,640,998.19 1,597,335,349.04 7,067,985,215.04

(Please see notes to the fâ&#x20AC;&#x160;inancial statements which formed an integral part of these statements)

88 Annual Report 2008 L.P.N. Development Public Company Limited

Separated (Baht)


Liabilities and shareholders’ equity Note Current liabilities Overdrafts and short-term loans from f inancial institutions Refund down payment payable Trade accounts and notes payable Current portion of long-term loans and liabilities Short-term loans from related parties Payable to related parties Other current liabilities Advance received Retention Accrued income tax Accrued specif ic business tax Accrued bonus Others Total current liabilities Non-current liabilities Liabilities under f inancial lease equipment-net Long-term loans Other non-current liabilities Deposit for rent and service Others Total non-current liabilities Total liabilities Shareholders’ equity Share capital Authorized share capital 1,475,698,768 ordinary shares at Baht 1.00 each Issued and fully paid-up share capital 1,475,698,768 ordinary shares at Baht 1.00 each Premium on share capital Retained earnings Appropriated Legal reserve Reserve for treasury stock Unappropriated Total shareholders’ equity of the parent Less Treasury stock Total shareholders’ equity-net Minority interest Total shareholders’ equity including minority interest Total liabilities and shareholders’ equity

Consolidated (Baht) 2008 2007

Separated (Baht) 2008 2007

13

1,345,078,533.81 1,402,950.53 690,266,716.33

441,887,755.53 627,996.34 553,593,339.28

1,345,078,533.81 1,402,950.53 687,352,979.41

441,285,032.16 627,996.34 549,914,877.21

14, 15 10.5 10.4

718,608,409.63 -

760,118,629.06 -

716,589,992.57 69,000,000.00 26,319,881.99

757,677,876.80 22,878,510.58

626,974,082.05 93,799,677.65 224,483,274.98 1,333,590.15 11,966,862.34 97,979,970.23 3,811,894,067.70

593,706,209.33 172,305,635.78 226,714,510.77 6,244,072.75 72,792,009.51 2,827,990,158.35

626,296,082.05 93,799,677.65 214,223,716.84 1,333,590.15 2,911,512.34 76,720,834.76 3,861,029,752.10

593,706,209.33 172,198,159.15 217,023,047.18 6,244,072.75 44,606,577.95 2,806,162,359.45

6,759,053.52 530,672,345.00

7,625,053.60 501,000,000.00

5,384,449.68 530,672,345.00

3,640,635.97 501,000,000.00

11,227,528.18 1,466,721.05 550,125,647.75 4,362,019,715.45

10,016,686.61 2,167,721.05 520,809,461.26 3,348,799,619.61

10,217,100.14 1,120,401.05 547,394,295.87 4,408,424,047.97

9,077,560.44 1,055,401.05 514,773,597.46 3,320,935,956.91

1,475,698,768.00

1,475,698,768.00

1,475,698,768.00

1,475,698,768.00

1,475,698,768.00 441,807,166.00

1,475,698,768.00 441,807,166.00

1,475,698,768.00 441,807,166.00

1,475,698,768.00 441,807,166.00

148,000,000.00 16,689,514.97 2,418,837,427.68 4,501,032,876.65 (16,689,514.97)

148,000,000.00 1,761,339,843.92 3,826,845,777.92 -

148,000,000.00 16,689,514.97 2,307,467,488.54 4,389,662,937.51 (16,689,514.97)

148,000,000.00 1,681,543,324.13 3,747,049,258.13 -

131,799.89

109,612.69

-

-

4,484,475,161.57 8,846,494,877.02

3,826,955,390.61 7,175,755,010.22

4,372,973,422.54 8,781,397,470.51

3,747,049,258.13 7,067,985,215.04

3.10, 14 15

18

18, 20.1 20.2 3.16, 19

(Please see notes to the f inancial statements which formed an integral part of these statements) Annual Report 2008 L.P.N. Development Public Company Limited 89


Statements of income For the each year ended December 31, 2008 and 2007 Note Revenues Sales Rental and service business income Management business income Total revenues Cost Cost of sales Cost of rental and service business Cost of management business Total cost Gross prof it Other income Interest income Equity gain from investment in associates Dividend received Contract changing income Others Total other income Selling expenses Administrative expenses Loss on impairment of assets Directors’ remuneration F inance cost-interest expenses Equity loss from investment in associates Total expenses Prof it before income tax Income tax Prof it for the period Attributable to Equity holders of the parent Minority interest

10.3

3.12

Basic earnings per share 3.15 Weighted average number of ordinary shares (share)

Consolidated (Baht) 2008 2007

2008

2007

7,018,707,430.85 70,183,747.29 143,464,477.41 7,232,355,655.55

6,574,216,421.66 55,332,090.25 124,452,926.29 6,754,001,438.20

7,014,418,284.62 67,017,602.41 - 7,081,435,887.03

6,547,305,156.14 51,247,492.58 - 6,598,552,648.72

(4,826,169,232.07) (40,555,069.21) (124,497,272.29) (4,991,221,573.57) 2,241,134,081.98

(4,294,887,108.75) (38,994,178.50) (79,625,154.30) (4,413,506,441.55) 2,340,494,996.65

(4,896,877,259.91) (47,307,005.65) - (4,944,184,265.56) 2,137,251,621.47

(4,341,953,760.99) (44,112,691.03) - (4,386,066,452.02) 2,212,486,196.70

11,686,792.35 - - 32,570,314.47 27,080,819.56 71,337,926.38 (130,363,190.21) (454,548,421.35) - (11,070,000.00) (10,124,275.92) (6,643,294.09) (612,749,181.57) 1,699,722,826.79 (494,211,604.38) 1,205,511,222.41

13,900,663.29 - - 23,365,193.64 32,506,349.48 69,772,206.41 (118,106,864.80) (635,462,892.82) (250,000,000.00) (9,248,480.00) (3,547,934.69) (4,526,890.09) (1,020,893,062.40) 1,389,374,140.66 (461,559,540.49) 927,814,600.17

10,869,902.59 - 46,849,620.00 32,570,314.47 26,365,924.82 116,655,761.88 (351,742,671.88) (253,111,730.64) - (11,070,000.00) (9,929,083.90) - (625,853,486.42) 1,628,053,896.93 (454,188,661.07) 1,173,865,235.86

14,259,733.92 - 35,297,334.40 23,365,193.64 32,216,533.28 105,138,795.24 (301,420,643.82) (410,880,754.89) (250,000,000.00) (9,248,480.00) (3,091,113.43) - (974,640,992.14) 1,342,983,999.80 (433,182,437.57) 909,801,562.23

1,205,438,655.21 72,567.20 1,205,511,222.41 0.82 1,474,593,089

927,738,553.30 76,046.87 927,814,600.17 0.63 1,475,698,768

1,173,865,235.86 - 1,173,865,235.86 0.80 1,474,593,089

909,801,562.23 - 909,801,562.23 0.62 1,475,698,768

(Please see notes to the f inancial statements which formed an integral part of these statements)

90 Annual Report 2008 L.P.N. Development Public Company Limited

Separated (Baht)


Statements of changes in shareholders’ equity For the each year ended December 31, 2008 and 2007 Consolidated (Baht) Equity holders of the parent Issued and Premium on fully paid-up common Treasury stock share capital share Beginning balance as at January 1, 2007 Additional Increase (Decrease) in legal reverse during the period Prof it for the period Dividend paid Balance as at December 31, 2007 Beginning balance as at January 1, 2008 Treasury stock Reserve for treasury stock Prof it for the period Dividend paid Balance as at December 31, 2008

Reserve Unappropriated for retained treasury earnings stock

Legal reserve

Total

Minority interest

Total

1,475,698,768.00

441,807,166.00

-

123,000,000.00

-

1,271,796,945.66

3,312,302,879.66

68,865.82

3,312,371,745.48

-

-

-

-

-

-

-

700.00

700.00

-

-

-

25,000,000.00

-

(25,000,000.00)

-

-

-

-

-

-

-

-

927,738,553.30

927,738,553.30

76,046.87

927,814,600.17

-

-

-

-

-

(413,195,655.04)

(413,195,655.04)

(36,000.00)

(413,231,655.04)

1,475,698,768.00

441,807,166.00

-

148,000,000.00

-

1,761,339,843.92

3,826,845,777.92

109,612.69

3,826,955,390.61

1,475,698,768.00

441,807,166.00

-

148,000,000.00

-

1,761,339,843.92

3,826,845,777.92

109,612.69

3,826,955,390.61

-

- (16,689,514.97)

-

-

-

(16,689,514.97)

-

(16,689,514.97)

-

-

-

- 16,689,514.97

(16,689,514.97)

-

-

-

-

-

-

-

-

1,205,438,655.21

1,205,438,655.21

72,567.20

1,205,511,22.41

-

-

-

-

-

(531,251,556.48)

(531,251,556.48)

(50,380.00)

(531,301,936.48)

148,000,000.00 16,689,514.97

2,418,837,427.68

4,484,343,361.68

131,799.89

4,484,475,161.57

1,475,698,768.00

441,807,166.00 (16,689,514.97)

Separated (Baht) Issued and fully Premium on Reserve for Unappropriated paid-up Treasury stock Legal reserve treasury stock retained earnings share capital common share Beginning balance as at January 1, 2007 Increase (Decrease) in legal reserve during the period Prof it for the period Dividend paid Balance as at December 31, 2007 Beginning balance as at January 1, 2008 Treasury stock Reserve for treasury stock Prof it for the period Dividend paid Balance as at December 31, 2008

Total

1,475,698,768.00

441,807,166.00

-

123,000,000.00

-

1,209,937,416.94

3,250,443,350.94

-

-

-

25,000,000.00

-

(25,000,000.00)

-

-

-

-

-

-

909,801,562.23

909,801,562.23

-

-

-

-

-

(413,195,655.04)

(413,195,655.04)

1,475,698,768.00

441,807,166.00

-

148,000,000.00

-

1,681,543,324.13

3,747,049,258.13

1,475,698,768.00

441,807,166.00

-

148,000,000.00

-

1,681,543,324.13

3,747,049,258.13

-

-

(16,689,514.97)

-

-

-

(16,689,514.97)

-

-

-

-

16,689,514.97

(16,689,514.97)

-

-

-

-

-

-

1,173,865,235.86

1,173,865,235.86

-

-

-

-

-

(531,251,556.48)

(531,251,556.48)

1,475,698,768.00

441,807,166.00

(16,689,514.97)

148,000,000.00

16,689,514.97

2,307,467,488.54

4,372,973,422.54

(Please see notes to the f inancial statements which formed an integral part of these statements) Annual Report 2008 L.P.N. Development Public Company Limited 91


Statements of cash f lows For the each year ended December 31, 2008 and 2007 Cash f lows from operating activities Prof it before income tax Items to reconcile net income to net cash f lows from operating activities Dividend received Bad debt and doubtful accounts Depreciation of assets Loss on sales of investment Loss on impairment of assets Loss on devaluation of goods Loss (Gain) on sales of assets Loss on write off assets lost Equity (gain) loss on investments in subsidiaries and associates Loss on amortized withholding income tax F inance cost-interest expenses Prof it from operation before change in operating assets and liabilities Operating assets (increase) decrease Trade accounts and notes receivable Unbilled construction income Receivable from related parties Inventories Land and cost of project held for development Advance payment to contractors Other current assets Other non-current assets Operating assets (increase) decrease Operating liabilities increase (decrease) Trade accounts and notes payable Refund down payment payable Payable to related parties Other current liabilities Other non-current liabilities Operating liabilities increase (decrease)

Consolidated (Baht) 2008 2007

2007

1,699,722,826.79

1,389,374,140.66

1,628,053,896.93

1,342,983,999.80

36,857,646.03 19,698,042.72 (9,562,939.66) 63,822.69

45,000.00 34,237,359.91 306,666.82 250,000,000.00 (1,322,932.02) -

(46,849,620.00) 26,782,669.51 19,698,042.72 (9,681,886.92) 63,822.69

(35,297,334.40) 45,000.00 23,749,429.70 1,146,667.24 250,000,000.00 (158,975.24) -

6,643,294.09 3,413,564.87 10,124,275.92

4,526,890.09 3,332,884.45 3,547,934.69

9,929,083.90

3,091,113.43

1,766,960,533.45

1,684,047,944.60

1,627,996,008.83

1,585,559,900.53

(410,494.67) (117,953,322.14) (1,042,816.30) (985,138,273.81) 833,392,642.47 (62,955,406.17) (9,107,155.28) (1,944,028.20) (345,158,854.10)

(2,369,185.26) (40,368,314.65) 3,700,359.60 (303,455,118.12) (1,007,019,785.90) (41,001,534.91) 930,689.69 (1,389,582,889.55)

(460,494.67) (117,953,322.14) (73,328,744.07) (989,266,291.38) 959,013,699.38 (62,955,406.17) (3,166,687.70) (5,352,093.07) (293,469,369.82)

(2,727,974.73) (40,368,314.65) 113,681.48 (297,819,253.55) (984,114,915.83) (29,379,704.67) (1,583,194.76) (1,355,879,676.71)

136,237,382.74 774,954.19 (12,427,423.29) 509,841.57 125,094,755.21

203,435,662.75 386,996.34 (42,811,179.69) 3,395,852.01 164,407,331.41

137,002,107.89 774,954.19 3,441,371.41 (15,127,000.57) 1,204,539.70 127,295,972.62

201,744,776.49 386,996.34 12,593,667.34 (50,859,430.66) 3,101,552.01 166,967,561.52

(Please see notes to the f inancial statements which formed an integral part of these statements)

92 Annual Report 2008 L.P.N. Development Public Company Limited

2008

Separated (Baht)


Cash generated (paid) from operation Interest paid Income tax paid Net cash provided by (used in) operating activities Cash f lows from investing activities Current investment-promissory notes Short-term loans to related parties (Increase) Decrease in current portion of long-term loans to related parties Investment in subsidiaries and associates Received from sales of investment Dividend received Purchase of f ixed assets Purchase of assets for rent Sale of f ixed assets Sale of assets for rent Net cash provided by (used in) investing activities Cash f lows from f inancing activities Received from short-term loans from related parties Received (Paid) to bank overdraft Received from short-term loans from f inancial institutions Paid for short-term loans to f inancial institutions Received from long-term loans Paid for long-term loans Liabilities under f inancial lease agreement Received from increase share capital from minority interest Dividend paid Treasury stock-ordinary shares Net cash provided by (used in) f inancing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as at January 1 Cash and cash equivalents as at December 31

Consolidated (Baht) 2008 2007

2008

Separated (Baht)

2007

1,546,896,434.56 (113,995,663.42) (496,767,342.37)

458,872,386.46 (115,477,962.08) (375,108,381.64)

1,461,822,611.63 (114,902,579.29) (456,987,991.41)

396,647,785.34 (115,018,048.36) (352,271,726.81)

936,133,428.77

(31,713,957.26)

889,932,040.93

(70,641,989.83)

(1,050,000,000.00) -

-

(1,050,000,000.00) -

56,070,746.92

12,000,000.00 (66,000,000.00) (11,394,539.06) (750,622.98) 2,002,372.89 27,077,000.00 (1,087,065,789.15)

188,000,000.00 6,666,670.00 5,333,334.40 (12,655,551.24) (3,941,288.69) 1,088,410.97 5,071,248.69 189,562,824.13

12,000,000.00 (66,000,000.00) 46,849,620.00 (8,849,549.78) (750,622.98) 1,326,379.44 27,077,000.00 (1,038,347,173.32)

188,000,000.00 (150,999,300.00) 6,666,670.00 35,297,334.40 (7,892,071.67) (3,941,288.69) 246,971.71 1,102,637.38 124,551,700.05

23,190,778.28 2,207,990,000.00 (1,327,990,000.00) 2,476,820,000.00 (2,489,427,655.00) (5,766,219.51)

(9,933,716.31) 2,790,000,000.00 (2,730,000,000.00) 2,339,200,000.00 (1,950,000,000.00) (4,404,498.17)

69,000,000.00 23,793,501.65 2,207,990,000.00 (1,327,990,000.00) 2,476,820,000.00 (2,489,427,655.00) (2,734,070.52)

(9,027,289.96) 2,790,000,000.00 (2,730,000,000.00) 2,339,200,000.00 (1,950,000,000.00) (2,139,346.93)

(531,270,656.48) (16,689,514.97) 336,856,732.32 185,924,371.94 454,821,691.12 640,746,063.06

700.00 (413,239,233.04) 21,623,252.48 179,472,119.35 275,349,571.77 454,821,691.12

(531,220,276.48) (16,689,514.97) 409,541,984.68 261,126,852.29 314,972,916.56 576,099,768.85

(413,203,233.04) 24,830,130.07 78,739,840.29 236,233,076.27 314,972,916.56

Supplemental disclosures of cash f lows information see note 22

(Please see notes to the f inancial statements which formed an integral part of these statements) Annual Report 2008 L.P.N. Development Public Company Limited 93


Notes to f inancial statements As at December 31, 2008 and 2007 1.

Company’s operation L.P.N. Development Public Company Limited has been listed in the Stock Exchange of Thailand since on June 21, 1994. Type of business is Real Estate. The Company’s location and staff expenses are as follows: - Location: 1168/109, 36th F lr., Lumpini Tower, Rama IV Rd., Sathorn, Bangkok. - The Company has employees’ expenses as follows: Consolidated Separated 2008 2007 2008 2007 358.96 300.31 75.34 45.56 Employees expenses (Million Baht)

2.

Basis of preparation of the f inancial statements\ 2.1 The f inancial statements have been prepared in accordance with the generally accepted accounting principles enunciated under the Accounting Act B.E. 2547. Formerly, the condensed form of f inancial statements have been prepared under the notif ication of the Department of Business Development dated September 14, 2001 regarding the condensed form which must be shown in the f inancial statements. However, the Company has changed the format of f inancial statements presentation for the year ended December 31, 2008 to be in compliance with the Accounting Standards No. 25 (Revised 2007) “Cash F lows Statements” and No. 35 “(Revised 2007) Presentation of F inancial Statements” which is effective on or after January 1, 2008 onwards, by reclassifying the f inancial statements for the year ended December 31, 2007 to be appropriated. 2.2 The f inancial statements have been prepared under the historical cost convention, except as transaction disclosed in related accounting policy. 2.3 The consolidated f inancial statements for the year ended December 31, 2008 and 2007 consist of the f inancial statements of L.P.N. Development Public Company Limited and its subsidiaries. The Company held in its subsidiaries shares capital as follows:

Pornsanti Co., Ltd. Lumpini Property Management Co., Ltd. Lumpini Project Management Services Co., Ltd.

Percentage 99.99 99.88 99.93

Type of business Real Estate Service Service

Relationship Shareholding/Command by director Shareholding/Command by director Shareholding/Command by director

2.4 Transaction with related companies Inter-company transactions have been eliminated in the consolidated f inancial statements. 2.5 The consolidated f inancial statements have been presented the f inancial position and results of operation of L.P.N. Development Public Company Limited and its subsidiaries companies. The usefulness of transaction of consolidated f inancial statements for other purposes may be limited due to the difference business of those consolidated companies. 2.6 According to the Notif ication of the Federation of Accounting Professions no. 26/2549 and no. 32/2549 dated October 11, 2006 and November 3, 2006, respectively requested to amend the Accounting Standards no.44 “Consolidated F inancial Statements and Accounting for Investments in Subsidiaries” and no.45 “Accounting for Investments in Associates” required the Company who invested in subsidiaries, to change the accounting policy for investment in subsidiaries from equity method to cost method. Hence, in the f irst quarter of 2007, the Company has adjusted the beginning of 2007 retained earnings and retroactively restated the 2006 separate f inancial statements by using cumulative effect of change in accounting policy as stated in notes to f inancial statements no. 3.18, 4. 3.

Significant Accounting Policies 3.1 Cash and cash equivalents For the purposes of the statements of cash f lows preparation, cash and cash equivalents include cash on hand and at banks which are due within 3 months. 3.2 Current investment - Current investment is stated at cost less provision for impairment (if any).

94 Annual Report 2008 L.P.N. Development Public Company Limited


3.3 Allowance for doubtful accounts The Company provides the allowance for doubtful accounts equal to the estimated loss of installment receivable by considering each receivable which has been overdue more than six month periods and to be standard of income recognition. 3.4 Land and project cost Land and cost of project under development are shown by the lower of specif ic method or net realizable value. The project cost consists of: cost of land, development cost, construction cost, miscellaneous expenses of the project and interest expenses. Interest expenses will be stopped to recognize as cost whenever the construction project have been completed or ceased exceeding 1 year. 3.5 Inventories - Untransferred condominium are valued at the lower of cost by using specif ic method or net realisable value. - Supplies are valued at the lower of cost on a f irst-in f irst-out (FIFO) method or net realisable value. 3.6 Long-term investment - Investment in aff iliates in consolidated f inancial statements are stated under equity method - Investment in subsidiaries and associates in the separate f inancial statements are stated at cost less provision for impairment (if any). 3.7 Assets for rent - Land are valued at cost, building and equipment which were not appraised, are stated at cost less accumulated depreciation. The depreciation is computed on straight-line method as follows: Number of years Off ice building and car parking 40 Off ice decoration and equipments 10 Computer 5 3.8 Property, plants and equipments-net/depreciation - Lands are valued at cost, building and equipment are valued at cost less accumulated depreciation. The depreciation is computed on straight-line method as follows: Number of years Building 40 Off ice decoration and equipments 10 Computer and RMS System 5 Vehicles 5 3.9 Impairment of Assests The Company has considered the impairment of land, building and equipment, investing capital, land and cost of undevelopment projects and intangible assets whenever events or changes indicate that the carrying amount of assets exceeds its recoverable value. The impairment loss will be recognized in statements of income. The Company will reverse the impairment loss whenever there is no longer impairment or reduction in impairment. Recoverable value of asset is either the net selling price or value from utilization of that asset, whichever is higher. The impairment will be estimated from each item of assets or each asset unit generating cash f low, whichever is practical. 3.10 Assets under f inancial lease agreement The Company records assets under f inancial lease agreement as assets and liabilities in an amount equal to the fair value of the lease assets at the inception of the agreement. Interest expenses are recorded to each period over the term of agreement based on the outstanding balance of the liabilities under f inancial lease agreement during each period. 3.11 Income and Expenses Recognition 3.11.1 Revenue from sales of properties and condominiums are recognized on the percentage of completed work which is based on the proportion of actual costs to the total estimated costs. The Company recognizes revenue when sales contracts have been executed not less than 40 percent of the area opened for sales and collection received exceeds 20 percent of each contract value, and the progress of completed construction work is more than 10 percent. The Company will stop to recognize such income whenever the overdue payment exceeding 3 consecutive installments and the percentage of completed work is over the installment due.

Annual Report 2008 L.P.N. Development Public Company Limited 95


3.11.2 Rental and services income relating to land, building and equipment are recognized on an accrual basis. 3.11.3 Revenue from services are recognized as income when the services are rendered. 3.11.4 Other income and expenses are recognized on an accrual basis. 3.11.5 Cost of condominiums and properties sold are recognized as cost of sales based on the percentage of income recognition. 3.12 Income tax The Company and subsidiaries recorded corporate income tax to be paid as expenses in each period based on the condition described in the Revenue Code. Corporate income tax is computed from revenues recognized on the installment due for the project sales before 2007 and revenue recognized on the percentage of completion for the project sales in 2007 onwards. 3.13 Use of accounting estimates Preparation of f inancial statements in conformity with generally accepted accounting principles required the management to make several estimation and assumption which affect the reported amounts in the f inancial statements and notes related thereto. Consequent actual results may differ from these estimates. 3.14 Provision for liabilities The Company recognizes a provision for liabilities when an entity has a present legal or constructive obligation as a result of a past event. It is probable that an outf low of economic benef its resources will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. If some or all the expenditure is required to settle a provision, is expected to be reimbursed when it is virtually certain that reimbursement will be received if the Company settles the obligation. The amount recognized should not exceed the amount of the provision. 3.15 Earnings per share - Basic earnings per share is determined by dividing net prof it (loss) for the period by the weighted average number of ordinary shares issued during the period. - Diluted earnings per share is calculated by dividing net prof it (loss) for the year by the sum of the weighted average number of ordinary shares issued during the year and the weighted average number of ordinary shares to be issued for conversion of all diluted potential ordinary shares (warrants) into ordinary shares. 3.16 Treasury stock The Company records treasury stock at cost. 3.17 Retirement benef it This obligation is to provide retirement benef it to retired employees under the def ined retirement plan, determined by the labor law. The Company will record the retirment cost in the period in which the employees retired. 3.18 New Accounting Standards Issuance In accordance with the notif ication No. 9/2550, No.38/2550 and No.62/2550 issued by the Federation of Accounting Professions, pertaining to the Accounting Standards announced in the Government Gazette, intention to follow the revised 2007 Accounting Standards instead of the old Accounting Standards which were cancelled as following: 3.18.1 The revised Accounting Standards became effective in 2007 No. 44 “Consolidated F inancial Statements and Separate F inancial Statements” No. 45 “Investments in Associates” No. 46 “Interests in Joint Venture” Those three Accounting Standards are required to adopt for the f inancial statements beginning on or after January 1, 2007 onwards. During the 1st quarter of 2007 the Company had changed the accounting policy for investment in subsidiaries and associates in the separate f inancial statements in order to conform to the revised Accounting Standards No. 44 and 45 as stated innotes to f inancial statements no.4, the Accounting Standards are not relevants to the Company’s business. 3.18.2 The revised Accounting Standards are operative in 2008 No. 25 (Revised 2007) “Cash F lows Statements” No. 29 (Revised 2007) “Leases” No. 31 (Revised 2007) “Inventories” No. 33 (Revised 2007) “Borrowing Costs” No. 35 (Revised 2007) “Presentation of F inancial Statements” No. 39 (Revised 2007) “Accounting Policies, Changes in Accounting Estimates and Fundamental Errors” No. 41 (Revised 2007) “Interim F inancial Reporting”

96 Annual Report 2008 L.P.N. Development Public Company Limited


No. 43 (Revised 2007) “Business Combinations” No. 49 (Revised 2007) “Construction Contracts” No. 51 “Intangible assets” Those ten Accounting Standards are required to adopt for the f inancial statements beginning on or after January 1, 2008 onwards. The Company’s management deems that the Accounting Standands no. 43, 49 and 51 had not related to the Company’s business. The Company has adopted all of any related Accounting Standards which are not materially affected to the Company’s f inancial statements. 3.18.3 The Accounting Standards which is effective in 2009 No. 36 (Revised 2007) “Impairment of Assets” No. 54 (Revised 2007) “Non-current Assets Held for Sale and Discontinued Operations” The adoption of aforementioned Accounting Standards is required for the f inancial statements for the accounting period beginning on or after January 1, 2009 onwards. The Company’s management deems that the adoption of those Accounting Standards had no material impacts on the f inancial statements. 4.

Change in accounting policy for investment in subsidiaries and associates As stated in notes 3.18 to f inancial statements, the Company has changed its accounting policy for investment in subsidiaries and associates in the separate f inancial statements from equity method to cost method. The Company has adjusted the beginning of 2007 retained earnings and retroactively restated the 2006 separate f inancial statements by using cumulative effect of change in such accounting policy. From this change, resulting to the decrease in beginning retained earnings and increase in investment in subsidiaries and associates for the year ended December 31, 2007 at the same amount of Baht 62.92 million.

5.

Current investment As at December 31, 2008 are as follows: Promissory note Bill of exchange Total

6.

Interest Rate 2.50%-3.80% 2.75%-4.00%

Accounts receivable-net As at December 31, 2008 and 2007 are as follows: Contract value (December 31, 2008: 85.64% December 31, 2007: 84.18% from project sale) Less Transferred contract value Balance of untransferred contract value Installment due Less Received payment Total accounts receivable Add Accounts receivable on collection of Tower 2 Total Less Unrealized installment income Transfer to related company receivable Account’s receivable Less Allowance for doubtful accounts Accounts receivable-net

Consolidated (Baht) 2008 2007 480,000,000.00 570,000,000.00 1,050,000,000.00

Consolidated (Baht) 2008 2007

Separated (Baht) 2008 2007 - 480,000,000.00 - 570,000,000.00 - 1,050,000,000.00

-

Separated (Baht) 2008 2007

26,008,701,338.31 21,972,009,916.98 25,993,851,338.31 21,931,089,916.98 (16,282,214,743.98) (12,637,632,679.98) (16,272,214,743.98) (12,596,712,679.98) 9,726,486,594.33 9,334,377,237.00 9,721,636,594.33 9,334,377,237.00 479,222,402.41 82,742,798.70 477,392,402.41 80,912,798.70 (390,048,474.21) (69,088,390.70) (388,431,474.21) (67,482,390.70) 89,173,928.20 13,654,408.00 88,960,928.20 13,430,408.00 - 39,000.00 - 89,173,928.20 13,693,408.00 88,960,928.20 13,430,408.00 (18,095,433.00) (13,317,700.00) (18,095,433.00) (13,317,700.00) (70,000,000.00) - (70,000,000.00) 1,078,495.20 375,708.00 865,495.20 112,708.00 (57,308.00) (57,308.00) (57,308.00) (57,308.00) 1,021,187.20 318,400.00 808,187.20 55,400.00 Annual Report 2008 L.P.N. Development Public Company Limited 97


7.

As at December 31, 2008 and 2007 accounts receivable were classifâ&#x20AC;&#x160;ied by aging as follows: Consolidated (Baht) 2008 2007 Overdue 1-3 months 17,761,052.00 11,874,200.00 Overdue 4-6 months 894,268.20 1,017,600.00 Overdue 7-12 months 238,400.00 481,300.00 Overdue 12 months 280,208.00 320,308.00 Total 19,173,928.20 13,693,408.00 Less Unrealized installment income (18,095,433.00) (13,317,700.00) Accounts receivable 1,078,495.20 375,708.00 Less Allowance for doubtful accounts (57,308.00) (57,308.00) Accounts receivable-net 1,021,187.20 318,400.00 Installment receivable/Unrealized revenue As at December 31, 2008 and 2007 are as follows:

Consolidated (Baht) Separated (Baht) 2008 2007 2008 2007 Installment receivable-net 479,222,402.41 82,742,798.70 477,392,402.41 80,912,798.70 Less Realized income under percentage of completion (683,784,727.35) (174,129,534.50) (681,954,727.35) (172,299,534.50) Total (204,562,324.94) (91,386,735.80) (204,562,324.94) (91,386,735.80) This disclosure consists of: Unbilled construction income Less Unrealized installment income Total Unbilled construction income Less Allowance for doubtful accounts Unbilled construction income-net

8.

Separated (Baht) 2008 2007 17,761,052.00 11,874,200.00 894,268.20 1,017,600.00 238,400.00 481,300.00 67,208.00 57,308.00 18,960,928.20 13,430,408.00 (18,095,433.00) (13,317,700.00) 865,495.20 112,708.00 (57,308.00) (57,308.00) 808,187.20 55,400.00

222,657,757.94 104,704,435.80 (18,095,433.00) (13,317,700.00) 204,562,324.94 91,386,735.80 222,657,757.94 104,704,435.80 (4,332,839.84) (4,332,839.84) 218,324,918.10 100,371,595.96

222,657,757.94 (18,095,433.00) 204,562,324.94 222,657,757.94 (4,332,839.84) 218,324,918.10

104,704,435.80 (13,317,700.00) 91,386,735.80 104,704,435.80 (4,332,839.84) 100,371,595.96

Land and cost of project under construction, and land and cost of project under development As at December 31, 2008 and 2007 are as follows: Consolidated (Baht) 2007 Increase (Decrease) 2008 Land 3,015,149,437.17 1,293,085,645.61 4,308,235,082.78 Cost of construction and design 2,848,065,750.10 3,933,507,407.94 6,781,573,158.04 Other expenses 63,977,920.00 105,414,311.29 169,392,231.29 Interest expenses 311,730,434.75 104,811,888.04 416,542,322.79 Total 6,238,923,542.02 5,436,819,252.88 11,675,742,794.90 Less Cost of sales-accumulated 4,108,252.36 882,499,142.89 886,607,395.25 Transfer to loss on impairment of assets 391,833,602.41 - 391,833,602.41 Transfer to inventories 594,662,947.68 5,154,802,972.31 5,749,465,919.99 Transfer to lease assets, offâ&#x20AC;&#x160;ice 41,580,000.00 - 41,580,000.00 Write off work in progress - 123,258,086.23 123,258,086.23 Total transfer 1,032,184,802.45 6,160,560,201.43 7,192,745,003.88 Total 5,206,738,739.57 (723,740,948.55) 4,482,997,791.02 Less Inter-company transaction 13,657,674.48 5,941,913.77 19,599,588.25 Balance 5,193,081,065.09 (729,682,862.32) 4,463,398,202.77 Less Land and cost of project under construction 4,532,358,897.69 (750,881,743.15) 3,781,477,154.54 Land and cost of project under development-net 660,722,167.40 21,198,880.83 681,921,048.23

98 Annual Report 2008 L.P.N. Development Public Company Limited


Land Cost of construction and design Other expenses Interest expenses Total Less Cost of sales-accumulated Transfer to loss on impairment of assets Transfer to inventories Transfer to lease assets, off ice Write off work in progress Total transfer Total Less Land and cost of project under construction Land and cost of project under development-net

Separated (Baht) 2007 Increase (Decrease) 2008 2,978,805,405.16 1,163,757,301.11 4,142,562,706.27 2,847,872,145.10 3,931,986,689.65 6,779,858,834.75 63,949,920.00 105,412,511.29 169,362,431.29 311,730,434.75 104,811,888.04 416,542,322.79 6,202,357,905.01 5,305,968,390.09 11,508,326,295.10 4,108,252.36 882,499,142.89 886,607,395.25 391,833,602.41 - 391,833,602.41 594,662,947.68 5,154,412,972.31 5,749,075,919.99 41,580,000.00 - 41,580,000.00 - 123,258,086.23 123,258,086.23 1,032,184,802.45 6,160,170,201.43 7,192,355,003.88 5,170,173,102.56 (854,201,811.34) 4,315,971,291.22 4,509,450,935.16 (731,630,920.45) 3,777,820,014.71 660,722,167.40 (122,570,890.89) 538,151,276.51

Land and cost of project under development consits of: Land Cost of construction and design Other expenses Total Less Provision for impairment of assets Net Less Inter-company transaction Land and cost of project under development-net

Consolidated (Baht) 2007 Increase (Decrease) 2008 957,857,026.51 51,727,732.94 1,009,584,759.45 88,724,610.11 (8,091,857.53) 80,632,752.58 5,974,133.19 (3,235,128.50) 2,739,004.69 1,052,555,769.81 40,400,746.91 1,092,956,516.72 (391,833,602.41) - (391,833,602.41) 660,722,167.40 40,400,746.91 701,122,914.31 - 19,201,866.08 19,201,866.08 660,722,167.40 21,198,880.83 681,921,048.23

Land Cost of construction and design Other expenses Less Inter-company transaction Land and cost of project under development-net

Separated (Baht) 2007 Increase (Decrease) 957,857,026.51 (110,944,643.57) 88,724,610.11 (8,361,318.82) 5,974,133.19 (3,264,928.50) (391,833,602.41) - 660,722,167.40 (122,570,890.89)

2008 846,912,382.94 80,363,291.29 2,709,204.69 (391,833,602.41) 538,151,276.51

- As at December 31, 2008 and 2007 the Company transferred land and cost of project under development with one year construction period by presenting in current assets amounted to Baht 3,781.48 and Baht 4,532.36 million, respectively. - Part of cost of sales arose from the recording on the percentage of income recognition in each period which accumulated from each project’s income recognition and will be transferred on the closing of construction project in the next period. - As at December 31, 2007, the Company has additionally recorded impairment of land project under development for another amount of Baht 250.00 million which was appraised on valuation in use method by the management. The loss on impairment of assets was recognized in the 2007 Statement of income. The company had impaired the assets with the consideration of awareness, rationality, and risk management. - As at December 31, 2008 and December 31, 2007, the remaining project in progress are eight projects. - As at December 31, 2008 and December 31, 2007, land and cost of project under construction amounted to Baht 3,981.15 million (2007: Baht 4,321.67 million) were mortgaged as collateral for overdrafts and short-term loans from f inancial institution as stated in notes to f inancail statements no. 13, and loans from commercial bank and the f inancial institutions as mentioned in notes to f inancial statements no. 15 and 16 Annual Report 2008 L.P.N. Development Public Company Limited 99


9.

Inventories As at December 31, 2008 and 2007 are as follows: Condominium Supplies Total Less Provision for devaluation of goods Net Less Inter-company transaction Grand total

Consolidated (Baht) 2008 2007 1,423,600,412.02 501,984,482.29 69,322.72 69,322.72 1,423,669,734.74 502,053,805.01 (19,698,042.72) - 1,403,971,692.02 502,053,805.01 - 417,975.88 1,403,971,692.02 501,635,829.13

Separated (Baht) 2008 2007 1,416,052,412.02 489,890,488.84 - 1,416,052,412.02 489,890,488.84 (19,698,042.72) 1,396,354,369.30 489,890,488.84 - 1,396,354,369.30 489,890,488.84

- As at December 31, 2008, inventories amount of Baht 635.60 million was mortgaged as collateral for overdrafts and short-term loans from f inancial institutions as stated in note 13 and loans from commercial bank and f inancial institutions as stated in note 15 and 16. - As at December 31, 2008, the Company recorded the devaluation of inventories in the form of condominium total amount of Baht 19.70 million. 10.

Transaction with related companies Company 1. Pornsanti Co., Ltd.

Description Loans from the Company

The Company allowed to use bank guarantee No service charge

2. Lumpini Property Management Co., Ltd. 3. Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Aff iliates)

Buy of land from the Company Construction management services and sales, assets management system for rent to the Company and associates Loans to the Company

Pricing policy Due in 2007, at the interest rate of 4.84-5.28% per annum

Base on agreement which Close to the independent appraiser’s appraisal value

Base on agreement

Due at call, at the interest rate of 2.633% per annum

Loans from the Company

Due at call, at the interest rate of 5-9.5% per annum

Construction management services and sales, dealer business derived from the Company’s subsidiaries

Collect service fee base on agreement

4. Lumpini Project Management Services Co., Ltd.

Advance from the Company Construction management services and sales to the Company

Due at call Collect service fee base on agreement

Loans to the Company

Due at call, at the interest rate of 2.633% per annum

100 Annual Report 2008 L.P.N. Development Public Company Limited


10.1 Receivables-related parties Lumpini Property Management Co., Ltd. Lumpini Project Management Services Co., Ltd. Pornsanti Co., Ltd. Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) Total Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) Total

2007 - 14,257.25 -

Separated (Baht) Increase Decrease 1,266,870.58 924,470.58 3,313,264.13 3,327,521.38 89,224,343.46 16,224,343.46

2008 342,400.00 73,000,000.00

- 14,257.25

7,797.11 93,812,275.28

631.32 73,343,031.32

2007 - -

10.2 Long-term loans to related parties Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) Less Current portion of long-term loans to related parties Net

2007

7,165.79 20,483,501.21

Consolidated (Baht) Increase Decrease 3,238,414.29 3,238,414.29

2,195,597.99 2,195,597.99

Consolidated and separated (Baht) Increase Decrease

2008 1,042,816.30 1,042,816.30

2008

12,000,000.00

-

12,000,000.00

-

(12,000,000.00) -

- -

(12,000,000.00) -

-

According to the resolution of the Board of directorsâ&#x20AC;&#x2122; meeting No. 4.2/1999 held on September 14, 1999 which approved to enter the debt restructuring date November 30, 1999 with PORNSANTI CO., LTD., the principal and interest in amount of Baht 246.96 million to be pay off within September 27, 2002 and stop to charge interest since January 1, 2000. The Company renews the contract with the payment on August 28, 2006. Later in the 3rd quarter of 2006, the Board of directorâ&#x20AC;&#x2122;s meeting No.4/2006 held on August 11, 2006, passed the resolution to receive promissory note from PORNSANTI CO., LTD. at the interest rate of 5.28% per annum, due on June 27, 2007 in place of the contract which will be expired. The Company has fully received the payment for such debt. On February 28, 2008, the Company has sold its land to PORNSANTI CO., LTD. for using as its project in the amount of Baht 129.20 million by receiving the payment amount of Baht 56.20 million, the remaining is Baht 73.00 million. 10.3 Investment in subsidiaries and associates Percentage Consolidated (Baht) Separated (Baht) Divided (Baht) of ownership Equity Method Cost Method As at December 31, 2008 Subsidiaries Pornsanti Co., Ltd. 99.99 - 318,037,237.15 Less Provision for impairment of investment - (111,425,191.36) Net - 206,612,045.79 Lumpini Property Management Co., Ltd. 99.88 - 998,800.00 35,057,880.00 Lumpini Project Management Services Co., Ltd. 99.93 - 999,300.00 11,791,740.00 Associates Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) 20.00 70,470,397.70 77,721,938.32 70,470,397.70 286,332,084.11 46,849,620.00 Total Annual Report 2008 L.P.N. Development Public Company Limited 101


Percentage Consolidated (Baht) Separated (Baht) Divided (Baht) of ownership Equity Method Cost Method As at December 31, 2008 Subsidiaries Pornsanti Co., Ltd. 99.99 - 318,037,237.15 Less Provision for impairment of investment - (111,425,191.36) Net - 206,612,045.79 Lumpini Property Management Co., Ltd. 99.88 - 998,800.00 29,964,000.00 Lumpini Project Management Services Co., Ltd. 99.93 - 999,300.00 Associates Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) 20.00 11,113,691.79 11,721,938.32 5,333,334.40 Total 11,113,691.79 220,332,084.11 35,297,334.40 The fâ&#x20AC;&#x160;inancial statements of associates which were brought into computation of investment, had equity loss in 2008 amount of Baht 6,643,294.09, were taken from the fâ&#x20AC;&#x160;inancial statements prepared by the management but were not audited by the auditor. As at December 31, 2007, the Company has sold partial of investment in Grand Unity Development Co., Ltd., the proportion of holding share remains 20 percent. As at December 31, 2008, the Company has purchased the increase share capital of Grand Unity Development Co., Ltd. for 11 million shares at the paid-up shares of Baht 6.00 each, amounting to Baht 66.00 million. Hence, the Company purchased such increase share under the old shareholding proportion. In 2007, the Company has invested in Lumpini Project Management Services Co., Ltd. with the proportion of shareholding at 99.93 percent. 10.4 Payable to related parties

Pornsanti Co., Ltd. Lumpini Property Management Co., Ltd. Lumpini Project Management Services Co., Ltd. Total

Separated (Baht) 2007 Increase Decrease - 2,700.00 - 22,878,510.58 108,394,897.54 122,716,182.36 - 208,636,440.71 190,876,484.48 22,878,510.58 317,034,038.25 313,592,666.84

2008 2,700.00 8,557,225.76 17,759,956.23 26,319,881.99

Lumpini Property Management Co., Ltd. Lumpini Project Management Services Co., Ltd. Total

Separated (Baht) 2007 Increase Decrease - 106,000,000.00 96,000,000.00 - 131,000,000.00 72,000,000.00 - 237,000,000.00 168,000,000.00

2008 10,000,000.00 59,000,000.00 69,000,000.00

10.5 Short-term loans from related parties

10.6 Sale-land Pornsanti Co., Ltd. Total

102 Annual Report 2008 L.P.N. Development Public Company Limited

Separated (Baht) 2008 2007 129,200,000.00 48,400,000.00 129,200,000.00 48,400,000.00


11.

10.7 Transaction with related parties

Consolidated (Baht) 2008 2007 10.7.1 Cost of sales Lumpini Project Management Services Co., Ltd. - - Lumpini Property Management Co., Ltd. - - Total - 10.7.2 Cost of rental and service business - - Lumpini Property Management Co., Ltd. 10.7.3 Operating expenses Lumpini Project Management Services Co., Ltd. - - - - Lumpini Property Management Co., Ltd. Total - - 10.7.4 Selling and administrative expenses Lumpini Project Management Services Co., Ltd. - - Lumpini Property Management Co., Ltd. - - Pornsanti Co., Ltd. - Total - - 10.7.5 Interest expenses Lumpini Project Management Services Co., Ltd. - - Lumpini Property Management Co., Ltd. - - Total - - 10.7.6 Interest income Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) 277,377.05 8,885,585.03 Pornsanti Co., Ltd. - - Total 277,377.05 8,885,585.03 10.7.7 Management business income Grand Unity Development Co., Ltd. and Subsidiaries Grand U Living Co., Ltd. (Associates) 3,230,617.18 8,036,809.67 Total 3,230,617.18 8,036,809.67 10.7.8 Gain on sales of land Pornsanti Co., Ltd. - - Total - - Assets for rent-net As at December 31, 2008 and 2007 are as follows: 2007 Cost Land-cost 145,934,600.81 Building-cost 575,577,450.43 Offâ&#x20AC;&#x160;ice decoration and equipments 35,143,152.23 Total 756,655,203.47

Increase

Separated (Baht) 2008 2007 64,339,648.25 12,571,999.22 76,911,647.47

71,333,388.32 71,333,388.32

9,994,565.44

8,437,849.72

144,283,447.12 85,710,028.21 229,993,475.33

184,295,681.38 184,295,681.38

849,000.00 1,062,000.00 13,500.00 1,924,500.00

2,640,000.00 2,640,000.00

13,345.34 118,304.67 131,650.01

-

277,377.05 - 277,377.05

8,885,585.03 1,435,656.93 10,321,241.96

- -

-

5,710,853.77 5,710,853.77

13,888,734.48 13,888,734.48

Consolidated (Baht) Decrease Transfer in (out)-net

- (4,415,757.04) - (14,017,902.44) 750,622.98 (3,364.49) 750,622.98 (18,437,023.97)

12,388,027.24 53,005,797.65 - 65,393,824.89

2008 153,906,871.01 614,565,345.64 35,890,410.72 804,362,627.37

Annual Report 2008 L.P.N. Development Public Company Limited 103


Consolidated (Baht) 2007 Increase Decrease Transfer in (out)-net 2008 Accumulated depreciation Building-cost 67,353,448.60 14,782,709.33 (427,993.42) 69,207.18 81,777,371.69 1,829,056.72 (784.83) - 11,750,542.89 Off ice decoration and equipments 9,922,271.00 Total 77,275,719.60 16,611,766.05 (428,778.25) 69,207.18 93,527,914.58 Net 679,379,483.87 - - - 710,834,712.79 Less Inter-company transaction 845,497.48 - - - 845,497.48 709,989,215.31 Assets for rent-net 678,533,986.39 Depreciation as at December 31, 2008 16,611,766.05 Depreciation as at December 31, 2007 15,264,606.14 Separated (Baht) 2007 Increase Decrease Transfer in (out)-net 2008 Cost Land-cost 134,891,449.62 - (4,415,757.04) 12,388,027.24 142,863,719.82 Building-cost 471,698,689.84 - (14,017,902.44) 53,005,797.65 510,686,585.05 Off ice decoration and equipments 31,109,401.26 750,622.98 (3,364.49) - 31,856,659.75 Total 637,699,540.72 750,622.98 (18,437,023.97) 65,393,824.89 685,406,964.62 Accumulated depreciation Building-cost 44,691,103.03 12,207,991.25 (427,993.42) 69,207.18 56,540,308.04 1,559,054.77 (784.83) - 7,896,405.76 Off ice decoration and equipments 6,338,135.82 Total 51,029,238.85 13,767,046.02 (428,778.25) 69,207.18 64,436,713.80 620,970,250.82 Assets for rent-net 586,670,301.87 Depreciation as at December 31, 2008 13,767,046.02 Depreciation as at December 31, 2007 12,374,182.80 As at December 31, 2008 and 2007, the Company has transferred inventories in the amount of Baht 63.10 million and Baht 77.98 million to be assets for lease. As at December 31, 2008 and 2007, land and building for lease of Baht 341.02 million and Baht 336.60 million, respectively (the Company only: Baht 329.20 million) were mortgaged as collateral for overdrafts and short-term loans from commercial bank and f inancial institution as stated in note 13, 15 and 16. As at December 31, 2008 and 2007, the Company has assets for rent which were fully depreciated, but still being operated at the cost value amounting to Baht 4.71 million and Baht 3.16 million, respectively (the Company only: Baht 3.37 million and Baht 1.84 million). 12.

Property, plants and equipments-net As at December 31, 2008 and 2007 are as follows: 2007 Cost Land and building 36,718,449.69 Off ice decoration 11,006,323.49 Off ice equipments 46,672,966.89 RMS system 18,869,709.72 Computer 37,208,619.00 Vehicles 26,708,000.00 Tools 1,720,112.61 System under development 2,430,484.04 Total 181,334,665.44

104 Annual Report 2008 L.P.N. Development Public Company Limited

Increase

Consolidated (Baht) Decrease Transfer in (out)

- 1,232,665.89 3,247,065.64 600,101.84 2,394,929.00 8,706,020.00 552,163.56 961,590.13 17,694,536.06

- - (104,496.32) - (1,065,593.08) (6,908,000.00) - - (8,078,089.40)

(2,289,456.69) - - 524,574.17 356,000.00 - - (874,574.17) (2,283,456.69)

2008 34,428,993.00 12,238,989.38 49,815,536.21 19,994,385.73 38,893,954.92 28,506,020.00 2,272,276.17 2,517,500.00 188,667,655.41


2007 Accumulated depreciation Land and building 6,186,953.11 Off ice decoration 2,195,789.71 Off ice equipments 31,934,075.91 RMS system 10,285,072.61 Computer 24,213,589.85 Vehicles 12,326,247.65 Tools 1,071,483.31 Total 88,213,212.15 Net 93,121,453.29 Depreciation as at December 31, 2008 Depreciation as at December 31, 2007 2007 Cost Land and building 34,033,585.18 Off ice decoration 11,006,323.49 Off ice equipments 37,260,798.78 RMS System 18,869,709.72 Computer 18,531,083.71 Vehicles 13,205,000.00 System under development 44,984.04 Total 132,951,484.92 Accumulated depreciation Land and building 3,502,088.60 Off ice decoration 2,195,789.71 Off ice equipments 24,996,578.90 RMS System 10,285,072.61 Computer 12,089,990.61 Vehicles 6,343,430.99 Total 59,412,951.42 Net 73,538,533.50 Depreciation as at December 31, 2008 Depreciation as at December 31, 2007

Consolidated (Baht) Increase Decrease Transfer in (out)-net

2008

776,450.55 1,100,520.35 2,959,018.38 3,150,751.69 5,900,603.80 6,090,073.43 268,461.78 20,245,879.98

- (69,207.18) 6,894,196.48 - - 3,296,310.06 (40,311.74) - 34,852,782.55 - - 13,435,824.30 (1,050,586.11) 5,997.00 29,069,604.54 (5,415,181.35) - 13,001,139.73 - - 1,339,945.09 (6,506,079.20) (63,210.18) 101,889,802.75 86,777,852.66 20,245,879.98 18,972,753.77 Separated (Baht) Increase Decrease Transfer in (out)-net 2008

- 1,232,665.89 2,730,344.52 600,101.84 1,280,827.40 8,706,020.00 599,590.13 15,149,549.78

- - (98,296.32) - (1,065,593.08) (5,700,000.00) - (6,863,889.40)

776,450.55 1,100,520.35 1,815,277.42 3,150,751.69 2,667,630.93 3,504,992.55 13,015,623.49

- - (37,053.29) - (1,050,586.11) (4,999,180.51) (6,086,819.91)

(2,289,456.69) - - 524,574.17 - - (524,574.17) (2,289,456.69)

31,744,128.49 12,238,989.38 39,892,846.98 19,994,385.73 18,746,318.03 16,211,020.00 120,000.00 138,947,688.61

(69,207.18) 4,209,331.97 - 3,296,310.06 - 26,774,803.03 - 13,435,824.30 - 13,707,035.43 - 4,849,243.03 (69,207.18) 66,272,547.82 72,675,140.79 13,015,623.49 11,375,246.90

As at December 31, 2008 and 2007, land and building of Baht 29.94 million and Baht 30.43 million, respectively were mortgaged as collateral for overdrafts and short-term and long-term loans from commercial bank and f inancial institution as stated in note 13, 15 and 16. As at December 31, 2008 and 2007, the Company has f ixed assets which were fully depreciated, but still being operated at the cost value amounting to Baht 43.07 million and Baht 34.34 million, respectively (the Company only: Baht 33.22 million and Baht 28.58 million). 13.

Bank overdraft and short-term loans from f inancial institutions As at December 31, 2008 and 2007 are as follows: Bank overdrafts Short-term loans from f inancial institutions Total

Consolidated (Baht) Separated (Baht) 2008 2007 2008 2007 25,078,533.81 1,887,755.53 25,078,533.81 1,285,032.16 1,320,000,000.00 440,000,000.00 1,320,000,000.00 440,000,000.00 1,345,078,533.81 441,887,755.53 1,345,078,533.81 441,285,032.16

Overdraft and short-term loans from f inancial institutions were guaranteed by land and cost of project under construction as stated in note 8, inventory as stated in note 9, land and building for lease as stated in note 11, and land and building as stated in note 12 and 16. Annual Report 2008 L.P.N. Development Public Company Limited 105


14.

15.

Liabilities under f inancial lease agreement Details of leased assets under f inancial lease are as follows: Vehicles Photocopier Total Less Accumulated depreciation Net book value

Consolidated (Baht) 2008 2007 28,506,020.00 26,708,000.00 594,706.33 594,706.33 29,100,726.33 27,302,706.33 13,115,379.76 12,361,887.00 15,985,346.57 14,940,819.33

The minimum amounts to be paid under f inancial lease agreement are as follows: Consolidated (Baht) 2008 2007 Within 1 year 898,650.00 2,017,810.00 Over 1 year less than 3 years 3,339,439.25 6,683,601.25 Over 3 year less than 5 years 8,387,904.00 4,093,740.00 12,625,993.25 12,795,151.25 Less Future interest to be paid (978,530.10) (1,051,468.59) Present value of liabilities under f inancial lease agreement 11,647,463.15 11,743,682.66 Liabilities under f inancial lease agreement excluding future intertest are as follows: Consolidated (Baht) 2008 2007 Liabilities under f inancial lease agreement 11,647,463.15 11,743,682.66 Less Liabilities under f inancial lease agreement (4,888,409.63) (4,118,629.06) due within 1 year Liabilities under f inancial lease agreement-net 6,759,053.52 7,625,053.60

Separated (Baht) 2008 2007 16,211,020.00 13,205,000.00 405,206.33 405,206.33 16,616,226.33 13,610,206.33 4,908,969.35 6,362,456.65 11,707,256.98 7,247,749.68 Separated (Baht) 2008 2007 37,920.00 484,000.00 841,199.75 1,514,159.75 8,199,156.00 3,851,064.00 9,078,275.75 5,849,223.75 (823,833.50) (530,710.98) 8,254,442.25

5,318,512.77

Separated (Baht) 2008 2007 8,254,442.25 5,318,512.77 (2,869,992.57) 5,384,449.68

(1,677,876.80) 3,640,635.97

Long-term loans Details of leased assets under f inancial lease are as follows: Loans from f inancial institutions Less Current portion of long-term loans Net

Consolidated (Baht) Separated (Baht) 2008 2007 2008 2007 1,244,392,345.00 1,257,000,000.00 1,244,392,345.00 1,257,000,000.00 (713,720,000.00) (756,000,000.00) (713,720,000.00) (756,000,000.00) 530,672,345.00 501,000,000.00 530,672,345.00 501,000,000.00

In 2008 and 2007, the Company has withdrawn loans amount of Baht 1,244.39 million and Baht 1,257.00 million, respectively from the f inancial institution and interest rate was charged at market rate. The payment will be made on the closing project date. Long-term loans was guaranteed by land and cost of project under construction as mentioned in note 8, inventory as stated in note 9, land and building for lease as stated in note 11, and land and building as stated in note 12 and 16.

106 Annual Report 2008 L.P.N. Development Public Company Limited


16.

Pledged securities As at December 31, 2008 and 2007, part of land and cost of project under construction of Baht 3,981.15 million and Baht 4,321.67 million as stated in note 8, inventory amounted to Baht 635.60 million as stated in note 9, land-building for lease amounted to Baht 341.02 million (the Company only: Baht 329.20 million) and Baht 336.60 million as stated in note 11 and land-off ice building amounted to Baht 29.94 million and Baht 30.43 million, respectively as stated in note 12, were mortgaged as collateral for loans from commercial banks and f inancial institutions of Baht 5,594 million.

17.

Contingent liabilities and obligation 17.1 As at December 31, 2008 and 2007, the Company and subsidiaries have contingent liabilities from bank issuance of letter of guarantee as follows: 17.1.1 Letter of guarantee issued to Revenue Department amounting to Baht 17.21 million caused by the Company and its subsidiaries were assessed taxation in previous years amounting to Baht 27.57 million (The company only: Baht 7.41 million). From the appeal to the Revenue Department were granted to reduce penalties and surcharges from the tax assessment for the amount of Baht 17.21 million (The company only: Baht 2.62 million). But the Company has not recorded such amount as liabilities since the Company won the case from prosecution to the Tax Court but it is not f inalized because the Revenue Department appealed this case to the Supream Court. The ultimate outcome have not been known. 17.1.2 Letter of guarantee issued by bank to government agency and state enterprise amounting to Baht 7.07 million and Baht 2.61 million, respectively (the Company only: Baht 3.95 million and Baht 2.60 million). 17.1.3 Subsidiary has guaranteed loan to other person with bank amounting to Baht 1.01 million. 17.1.4 The Company was sued by its contractor for the breach of contract and claim for compensation amounting to Baht 46.67 million. The Company has recorded its construction cost in amounting to Baht 30.45 million and also made counter-claim to contractor for compensation in amounting to Baht 261.48 million. As at December 31, 2003, the Court of the f irst instance had decided the Company to pay to the contractor amounting to Baht 29.85 million and the contractor paid to the Company amounting to Baht 3 million. The net payment was Baht 26.85 million together with interest charge at the rate of 7.5 % per annum amounting to Baht 12.36 million totally Baht 39.21 million. The difference of Baht 8.76 million, was not recorded in this f inancial statements since the Company has f iled the appeal in order to relieve the execution and the Court received the collateral and allowed to relieve the execution in the appeal. The Company is awaiting for the decision of the Appeal Court and the result of case will give the advantage to the Company. 17.2 As at December 31, 2008 and 2007, the Company had the obligation under the agreement with the contractor which has to complete the construction work for approximately Baht 1,227.71 million (the Company only: Baht 1,227.51 million) and Baht 1,230.60 million, respectively. Share capital According to the shareholders’ general meeting for the year 2007 held on April 26, 2007 passed a resolution as follows: 18.1 The Meeting unanimously resolved to pay dividend from the operation results of 2006 at the rate of Baht 0.18 per share for the total amount of 1,475,698,768 shares amounting to Baht 265,625,778.24 and appropriated net prof it as a legal reserve at the rate of 5% of net prof it amounting to Baht 39,000,000.00. According to the Board of directors’ Meeting No. 4/2007 held on August 6, 2007, passed a resolution as follows: 18.2 The Meeting unanimously resolved to pay interim dividend from the operation results of 2007 at the rate of Baht 0.10 per share for the total amount of 1,475,698,768 shares amounting to Baht 147,569,876.80. According to the shareholders’ general meeting for the year 2008 held on April 24, 2008 passed a resolution as follows: 18.3 The Meeting unanimously resolved to pay dividend from the operation results of 2006 at the rate of Baht 0.22 per share for the total 1,475,698,768 shares amounting to Baht 324,653,728.96. According to the Board of directors’ meeting No. 5/2008 held on August 7, 2008, passed a resolution as follows: 18.4 The Meeting unanimously resolved to pay interim dividend from the operation results of 2008 at the rate of Baht 0.14 per share for the total 1,475,698,768 shares amounting to Baht 206,597,827.52.

18.

Annual Report 2008 L.P.N. Development Public Company Limited 107


19.

20.

21.

Treasury stock According to the Board of Directors’ meeting no. 6/2008 held on October 9, 2008 passed to approve the treasury stock program for the purpose of f inancial management not exceed 62 million shares equal to 4.20 percent of total paid-up capital, with the maximum amount not exceeding Baht 200 million. The repurchased period in the Stock Exchange of Thailand will be started from October 24, 2008 to April 23, 2009. The period of repurchase will be exercised within 3 years commencing from the end of treasury stock repurchase period (six months). The Company’s treasury stock had no a right on the meeting for voting and get the dividend. If the treasury stock could not be sold in the exercise period from the repurchasing date that the Company will reduce the paid-up share capital by write-off the registered treasury stock which was not sold. As at December 31, 2008, the Company has treasury stock for 7.5963 million shares at cost of Baht 16.69 million. Retained earnings 20.1 Legal reserve According to the Public Company Limited Act. B.E.2535, the Company is required to set aside a legal reserve at lease 5% of annual net prof it after deducting def icit brought forward (if any) until the legal reserve reachs 10% of authorized share capital. Such legal reserve is not available for dividend distribution. 20.2 Reserve for treasury stock The Company appropriated retained earnings amount of Baht 16.69 million as reserve for treasury stock in accordance with guidance of the Judicial Committee and the Federations of Accounting Professions in the caption “treasury stock under Section 66/1(2)”. F inancial instruments F inancial risk management and policies The Company and its subsidiary companies are exposed to risk from changes in market interest rates and from nonperformance of contractual obligations by counterparties. The Company and its subsidiary companies do not hold or issue derivative instruments for speculative or trading purposes. Interest rate risk The interest rate risk is a result of future movements in market interest rates that will affect the results of the Company’s and its subsidiary companies’ operation and their cash f lows. The Company’s and its subsidiary companies’ exposure to interest rate risk primarily related to their deposits with f inancial institutions, bank overdrafts and loans. According to their management, the Company and its subsidiary companies do not use derivative f inancial instruments to hedge such risk since there is no domestic market for such activity. Credit risk The Company and its subsidiary companies are exposed to credit risk primarily with respect to accounts receivable and unbilled receivables. However, since the Company and its subsidiary companies do not transfer to rights of assets until the total amount of the contract value has been paid, they do not anticipate material losses from their debt collection.

Fair value of f inancial instruments The Company and its subsidiaries used the following methods and assumptions in estimating fair value of f inancial instruments as disclosed herein: - Cash and cash at banks and short-term investments are stated at fair value based on the amount in balance sheets. - Trade accounts and notes receivable with their maturities less than 90 days from the end of the period and defaulted receivable are stated at fair value based on the amount in balance sheets. - Loan to, is stated at fair value based on the amount in balance sheets. - Bank overdraft, trade accounts and notes payable due less than 90 days are presented at fair value based on the amount in the balance sheets. - Accrued interest payable is stated at fair value based on the amount in balance sheets. - Long-term loan with f loating rate of interest had the carrying value of loan equal to its fair value.

108 Annual Report 2008 L.P.N. Development Public Company Limited


22.

23.

Additional disclosure of cash f lows information 22.1 Cash and cash equivalents Cash and cash equivalents consist of cash on hand and at banks in the balance sheets as follows: Cash on hand and at banks

Consolidated (Baht) 2008 2007 640,746,063.06 454,821,691.12

Separated (Baht) 2008 2007 576,099,768.85 314,972,916.56

22.2 Assets under f inancial lease agreement As at December 31, 2008 the Company has hired purchase assets amount of Baht 8,400,000.00 by making payment amount of Baht 2,100,000.00 and the remaining is recorded as liabilities under f inancial lease agreeement in whole amount. As at December 31, 2007 the Company and subsidiary companies have hired purchase assets amount of Baht 594,706.33 (the Company only: Baht 405,206.33). 22.3 Assets for lease As at December 31, 2008 and 2007 the Company has transferred inventories in the form of condominiums and off ice building to be assets for lease in the amount of Baht 65.32 million and Baht 77.98 million, respectively. 22.4 Land and cost of project under construction As at December 31, 2008 the Company has sold its land to a subsidiary in the amount of Baht 3 million which recorded as related parties receivable in whole amount. 22.5 Land held for development As at December 31, 2008 the Company has sold its land to a subsidiary in the amount of Baht 126.20 million by receiving the payment amount of Baht 56.20 million, the remaining is recorded as related parties receivable in whole amount. Segment information (Unit: Million Baht) As at December 31, 2008, it consists of: Real Business type Estate Net sales 7,014.42 (4,896.88) Cost of sales Gross prof it 2,117.54 Other income - Selling expenses - Administrative expenses - Directors’ remuneration - F inance cost-interest expenses - Equity loss on investment in - subsudiaries and associates Prof it before income tax 2,117.54 Income tax - 2,117.54 Prof it for the period Attributable to Equity holders of the parent Minority interest F ixed assets as at December 31, 2008

Parent Company Rent & Others Total Service 67.02 - 7,081.44 (47.31) - (4,944.19) 19.71 - 2,137.25 - 116.66 116.66 - (351.74) (351.74) - (253.11) (253.11) - (11.07) (11.07) - (9.93) (9.93) - 19.71 -

- - (509.19) 1,628.06 (454.19) (454.19)

Subsidiaries Total Service Rent Real & & Others Total Eliminate Total Estate Management Service 10.00 459.76 5.09 - 7,556.29 (323.93) 7,232.36 (6.48) (124.50) (3.36) - (5,078.53) 87.31 (4,991.22) 3.52 335.26 1.73 - 2,477.76 (236.62) 2,241.14 - - - 2.76 119.42 (48.08) 71.34 - - - (0.91) (352.65) 222.29 (130.36) - - - (211.35) (464.46) 9.91 (454.55) - - - - (11.07) - (11.07) - - - (0.33) (10.26) 0.12 (10.14) - 3.52 -

19.71 (963.38) 1,173.87 3.52

72.68

-

- 335.26 -

335.26 -

- - - (6.64) (6.64) 1.73 (209.83) 1,758.74 (59.02) 1,699.72 - (40.02) (494.21) - (494.21)

1.73 (249.85) 1,264.53 (59.02) 1,205.51 -

14.10 86.78

-

1,205.44 0.07 1,205.51 86.78

Inter-company transactions are income from service, rental and interest income from subsidiaries. Transaction with related companies are in the normal course of business.

Annual Report 2008 L.P.N. Development Public Company Limited 109


As at December 31, 2007, it consists of: Real Business type Estate Net sales 6,547.30 Cost of sales (4,341.96) Gross prof it 2,205.34 Other income - Equity gain on investment in subsudiaries and associates - Selling expenses - Administrative expenses - Loss on impairment of assets - Directors’ remuneration - F inance cost-interest expenses - Equity loss on investment in associates - Prof it before income tax 2,205.34 Income tax - Prof it for the period 2,205.34 Attributable to Equity holders of the parent Minority interest F ixed assets as at December 31, 2007

24.

Parent Company Rent & Others Total Service 51.25 - 6,598.55 (44.11) - (4,386.07) 7.14 - 2,212.48 - 105.14 105.14 - - - - - -

- - (301.42) (301.42) (410.88) (410.88) (250.00) (250.00) (9.24) (9.24) (3.10) (3.10)

73.54

(Unit: Million Baht) Total

Subsidiaries Service Rent Real & & Others Total Eliminate Total Estate Management Service 40.80 390.36 6.19 - 7,035.90 (281.91) 6,753.99 (24.79) (79.63) (3.45) - (4,493.94) 80.43 (4,413.51) 16.01 310.73 2.74 - 2,541.96 (201.48) 2,340.48 - - - 1.37 106.51 (36.73) 69.78 - - - - - -

- - - - 7.14 (869.50) 1,342.98 16.01 - (433.18) (433.18) - 7.14 (1,302.68) 909.80 16.01

-

- - - - - - - 310.73 - 310.73 -

- - - - - -

- (1.41) (228.63) - - (1.89)

- - (302.83) 184.72 (118.11) (639.51) 4.05 (635.46) (250.00) - (250.00) (9.24) - (9.24) (4.99) 1.44 (3.55)

- - - (4.53) (4.53) 2.74 (230.56) 1,441.90 (52.53) 1,389.37 - (28.38) (461.56) - (461.56) 2.74 (258.94) 980.34 (52.53) 927.81 -

19.58 93.12

-

927.74 0.07 927.81 93.12

Inter-company transactions are income from service, rental and interest income from subsidiaries. Transaction with related companies are in the normal course of business.

Provident Fund The Company has a provident fund for employees. The fund consists of voluntary contributions by employees based on monthly salary at the rate of 2-4%, the company’s contribution of an additional 3-7% of the employee’s basic salary which was paid in to TFB SUBMUNKONG Registered Provident Fund No. 24/1997 on January 28, 1997 and Welfare Development Registered Provident Fund No.23/1993 on February 26, 1993 in accordance with the Provident Fund Act B.E. 2530 and including the benef its received from investment of the fund. The Company and subsidiaries paid the contribution to provident fund as following: Contribution to provident fund

Consolidated (Million Baht) 2008 2007 6.64 5.80

Separated (Million Baht) 2008 2007 1.65 1.15

25.

Directors’ remuneration payment According to the shareholders’ general meeting for the year 2008 held on April 24, 2008, passed to pay remuneration to directors whose strength in their duty, not exceed Baht 11.07 million per annum but excluding the remuneration or welfare pay to the directors who is employee of the Company. The allocation of such remuneration is the responsibility of the Board of directors which effective in every year until the resolution is changed. Thus, the Company has recorded this amount in expenses account.

26.

Approval of f inancial statements These f inancial statements have been approved to be issued by the Board of directors of the Company on February 19, 2009.

110 Annual Report 2008 L.P.N. Development Public Company Limited


Auditor’s Remuneration

1. Audit fee - The Auditor’s remuneration for the previous year was 850,000 Baht. - The Auditor’s off ice, persons or activities in connection with the auditor or its off ice, cost 450,000 Baht in the previous f inancial year. 2. Non-audit fee - None -

Annual Report 2008 L.P.N. Development Public Company Limited 111


Address of Projects

Office Building Lumpini Tower 1168 Rama 4 Rd., Thungmahamek, Sathorn, Bangkok 10120 Tel: 02-677-6356-7, 02-286-9855 Fax: 02-286-9856 L.P.N. Tower 216 Nang Linchi Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-285-4225-6 Fax: 02-285-4089 Residential Condominium

Lumpini Place Narathiwat 24 253, 255 Sathupradit Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-211-4351 Fax: 02-211-4375 Lumpini Place Rama 3-Charoenkrung 101 Rama 3 Rd., Bangkhorlaem, Bangkok 10120 Tel: 02-291-8632, 02-291-9333 Fax: 02-291-8607 Lumpini Place Narathiwatratchanakarin 471 A Building, B f loor, Narathiwat Ratchanakarin Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-294-6877 Fax: 02-294-6876

Lumpini Place 111 Soi Kraisri, Sri Bumpen Rd., Thungmahamek, Sathorn, Bangkok 10120 Tel: 02-671-1368-70 Fax: 02-249-1793

Lumpini Place Rama 3-River view 279 Rama 3 Rd., Bangkhorlaem, Bangkok 10120 Tel: 02-291-9915, 02-291-9918 Fax: 02-291-9923

Siphaya River View 108 Yotha Rd., Talad Noi, Samphanthawong, Bangkok 10100 Tel: 02-639-5002-4 Fax: 02-639-5004

Lumpini Place Pinklao 28 Bharomratchachonnanee Rd., Bangbumru, Bangplad, Bangkok 10700 Tel: 02-458-3111-2 Fax: 02-458-3113

P.S.T. Condoville Tower 1 118 Soi Nak Suwan, Nonsee Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-681-3112-3 Fax: 02-681-3113

Lumpini Place Narathiwat-Chaophraya 78 Rama 3 Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-293-1111 Fax: 02-293-1234

P.S.T. Condoville Tower 2 120 Soi Nak Suwan, Nonsee Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-681-3523-5 Fax: 02-681-3524

Lumpini Place Phahon-Saphankwai 171 Pradipat Rd., Samsennai, Phayathai, Bangkok 10400 Tel: 02-279-7770 Fax: 02-279-4443

P.S.T. City Home 128 Soi Nak Suwan, Nonsee Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-681-3501, 02-681-3505 Fax: 02-681-3509

Lumpini Place Ratchada-Thapra 18 Ratchadapisek Rd. (Thapra-Taksin), Bukkhalo, Thonburi, Bangkok 10600 Tel: 02-466-1144, 02-460-2250 Fax: 02-466-1145

“Lumpini Suite” Luxury Residential Condominium

Lumpini Place Pinklao 2 89 Bharomratchachonnanee Rd., Arun-Amarin, Bangkok-Noi, Bangkok 10700 Tel: 02-433-2551, 02-433-4444 Fax: 02-433-2552

ลุมพินี สวีท”

Lumpini Suite Sukhumvit 41 28 Sukhumvit Soi 41, Sukhumvit Rd., North-Klongton, Wattana, Bangkok 10110 Tel: 02-261-9330 Fax: 02-261-9331 Lumpini Suite Pinklao Bharomratchachonnanee Rd., Bangyeekhan, Bangplad, Bangkok 10700 Sale Off ice: Tel: 02-434-2244, 02-434-1140-2 Fax: 02-434-2211 Lumpini Suite Rama 8 Arun Amarin Rd., Bangyeekan, Bangplad Bangkok 10700 Sale Off ice: Tel: 02-434-2004 Fax: 02-434-2005 “Lumpini Place” Residential Condominium

ี เพลส”

Lumpini Place Sathorn 3, 7 Narathiwat Ratchanakarin Rd., Thungwatdon, Sathorn, Bangkok 10120 Tel: 02-287-4567 Fax: 02-287-4257 Lumpini Place Suanplu-Sathorn 435 Suanplu Soi 8, Sathorn 3 Rd., Sathorn, Bangkok 10120 Tel: 02-286-1585 Fax: 02-286-1850 Lumpini Place Rama 4-Sathorn 164 Soi Sri Bumpen, Rama 4 Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-350-2895 Fax: 02-350-2897

112 Annual Report 2008 L.P.N. Development Public Company Limited

Lumpini Place Rama 8 Arun Amarin Rd., Bangyeekan, Bangplad, Bangkok 10700 Sale Off ice: Tel: 02-434-2004 Fax: 02-434-2005 Call Center: 02-800-9009 Lumpini Place Rama 9-Ratchada Rama 9 Rd., Huai Kwang, Bangkok 10310 Sale Off ice: Tel: 02-248-1555 Fax: 02-248-8222 Call Center: 02-800-9009 Lumpini Place Ramindra-Laksi Ramindra Anusauwaree Rd., Bangkhen, Bangkok, 10220 Sale Off ice: Tel: 02-552-4242 Fax: 02-552-4646 Call Center: 02-800-9009 “Lumpini Ville” Residential Condominium Lumpini Ville Mary-Sathorn 1796 Chan Soi 27, Chan Rd., Sathorn, Bangkok 10120 Tel: 02-212-4515 Fax: 02-212-4375 Lumpini Ville Phahon-Suthisarn 23 Suthisarnvinijchai Rd., Samsennai, Phayathai, Bangkok 10140 Tel: 02-278-4125 Fax: 02-278-4128


Lumpini Ville Sukhumvit 77 681 On-Nuch Rd., Suanluang, Bangkok 10250 Tel: 02-332-3004-5 Fax: 02-332-3805 Lumpini Ville Cultural Center 593 Pracha U-thit Rd., Samsennok, Huaykwang, Bangkok 10140 Tel: 02-274-4210-2 Fax: 02-274-4211 Lumpini Ville Ramkhamhaeng 44 11 Ramkhamhaeng Soi 44, Ramkhamhaeng Rd., Huamak, Bangkapi, Bangkok 10240 Tel: 02-378-1559 Fax: 02-378-1559 Lumpini Ville Ramindra-Laksi Ramindra Rd., Anusawari, Bangkhen, Bangkok 10220 Sale Off ice: Tel: 02-552-4242 Fax: 02-552-4646 Lumpini Ville Prachachun-Phongphet Prachachun Rd., Amphur Muang, Nonthaburi 11000 Sale Off ice: Tel: 02-591-0088 Fax: 02-591-0030 Lumpini Ville Ramkhamhaeng 26 Ramkhamhaeng Soi 26, Krungthep Kreetha-Ramkhamhaeng Rd., Huamak, Bangkapi, Bangkok 10240 Sale Off ice: Tel: 02-300-1333 Fax: 02-300-0112 Lumpini Ville Bangkae Sukapiban Rd., Bangkae, Bangkok, 10160 Sale Off ice: Tel: 02-413-4455 Fax: 02-413-4446 Call Center: 02-800-9009 “Lumpini Center” Residential Condominium Lumpini Center Happyland A, B, C, F, G, H Building 556/1, 560/1, 568/1, 432/1, 582, 580 Happyland 1, Klongchun, Bangkapi, Bangkok 10240 Tel: 02-374-7270-1 Fax: 02-374-7270 D Building 335/1 Happyland 1, Klongchun, Bangkapi, Bangkok 10240 Tel: 02-374-6301-2 Fax: 02-374-6301 E Building 557 Happyland 1, Klongchun, Bangkapi, Bangkok 10240 Tel: 02-377-9395-6 Fax: 02-378-4370 Lumpini Center Latphrao 111 A, B, C, D Building 58, 60, 62, 64 Latphrao 111, Latphrao Rd., Klongchun, Bangkapi, Bangkok 10240 Tel: 02-370-2698, 02-370-2530 Fax: 02-370-2606 E,F,G Building 3041, 3033 Soi Yu-Yen 111, Latphrao Rd., Klongchun, Bangkapi, Bangkok 10240 Tel: 02-374-8394-5 Fax: 02-374-8395 Lumpini Center Sukhumvit 77 A, B, C, D, E Building 567, 573, 577, 591, 599 Soi On-Nuch 3-5, Sukhumvit 77 Rd., Suanluang, Bangkok 10250 Tel: 02-332-3803-4 Fax: 02-332-3805 Lumpini Center Nawamin 821 Soi Happyland 1, Klongchun, Bangkapi, Bangkok 10240 Tel: 02-375-8445, 02-375-8304 Fax: 02-375-8445

“Lumpini CondoTown” Residential Condominium Lumpini CondoTown Bodindecha-Ramkhamhaeng Ramkhamhaeng 43/1 Rd., Wangthonglang, Bangkok 10310 Sale Off ice: Tel: 02-539-8811 Fax: 02-539-7277 Lumpini CondoTown Ramindra-Laksi Ramindra Rd., Anusawari, Bangkhen, Bangkok 10220 Sale Off ice: Tel: 02-552-4242 Fax: 02-552-4646 Lumpini CondoTown Ratanathibet Ratanathibet Rd., Amphur Muang, Nonthaburi 11000 Sale Off ice: Tel: 02-525-4343 Fax: 02-525-4344 Townhouse Baan Lumpini Bang Bua Thong Phase 1,2 222 Talingchan-Bang Bua Thong Rd., Bang Bua Thong, Nonthaburi 11110 Head Off ice: Tel: 02-285-5011-6 Fax: 02-285-5017 Service Apartment Lumpini Residence Sathorn 222 Narathiwat Ratchanakarin Rd., Thungwatdon, Sathorn, Bangkok 10120 Tel: 02-287-3330 Fax: 02-287-3444 Joint Venture Project Lumpini Place WaterCliff 427, 421 Sathupradit Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-673-5596-7, 02-673-6360-1 Fax: 02-673-5595, 02-673-6362 Lumpini Suite Ratchada-Rama 3 441 Ratchadapisek Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-212-7909 Fax: 02-212-7908 Lumpini Townhome Ratchada-Rama 3 431 Sathupradit Rd., Chongnonsee, Yannawa, Bangkok 10120 Tel: 02-211-9221 Fax: 02-673-5595 Grand Heritage Thonglor 21 Soi Akapat (Thonglor 13), Sukhumvit 55 Rd., North-Klongton, Wattana, Bangkok 10110 Tel: 02-390-0910 Fax: 02-390-0911 Grand Parkview Asoke 189 Sukhumvit 21 Rd., North-Klongton, Wattana, Bangkok 10110 Tel: 02-261-3218-9 Fax: 02-258-0506 Parkview Viphavadi 1, Local Rd., Thungseegun, Donmuang, Bangkok 10210 Tel: 02-573-3401-3 Fax: 02-573-3401 Other Department Sales and Rent Management Tel: 02-287-3388 Fax: 02-287-3377

Annual Report 2008 L.P.N. Development Public Company Limited 113


ANNUAL REPORT 2008

L.P.N. Development Public Company Limited

Vision

“To perform a leading position of residential condominium developer through creating integrated value to promote the optimized quality of community resident’s life while sustaining shareholder and other stakeholder’s benefit under Good Corporate Governance standard”

Mission

To Shareholder:

ANNUAL REPORT 2008

Retain market leadership in focus target group and establish confidence with liquidity management for continuity of growth and optimized profit margin in accordance with Good Corporate Governance To Customer/Resident: Maintain value of integrated solutions of products, services and community management effectiveness to promote real pleasure of living of residents to create confidence and faith in the “Lumpini” Brand To Staff: Enhance Staffs happiness, career growth, security by developing competency via learning management, under LPN Core Value and organization change to be a Quality Organization To Stakeholders: Enlarge cooperation with business alliances to achieve corporate goals during the economic crisis To Society: Preserve the environment and be socially responsible in all areas of the organization to the develop a quality community

L.P.N. D e v e l o p m e n t P u b l i c C o m p a n y L i m i t e d

L.P.N. Development Public Company Limited 1168/109 36th Floor Lumpini Tower, Rama 4 Road, Thungmahamek, Sathorn, Bangkok 10120 Tel. 02-285-5011-6 Fax. 02-258-5017 Call Center 02-800-9009 www.lpn.co.th

Core Value Collaboration Lateral Thinking Alliances Speed

C - L - A - S - S - I - C Service Minded Integrity Cost Awareness

Content

Years o n t h e s t a b l e g r o w t h w a y

The Company's Background: 20 years on the stable growth way Summary of Financial Statement Message from the Chairman Management of the Environment and Society Management of Product Brand or Brand "Lumpini" Development of LPN's Condominium

1 7 8 10 18 20

Summary of the Real Estate Business in 2008 and Trends for 2009 Risk Factors Summary of the Performance in 2008 and Trends in 2009 Corporate Information

27 31 33 39

Audit Committee Report 2008 Management Structure LPN Code of Conduct Operating the Business According to Principals of "Sufficiency Economy" of L.P.N. Development PCL Internal Control Connected-Transactions with Subsidiary Companies

53 55 69

Explanation and Analysis of the Management Report on the Responsibility of the Board of Directors of the Company for the Financial Report Auditor's Report and Balance Sheets

83

72 73 75

86 87


Lpn 08